An indicative quote is a price quote that is informative only.
It is a type of quote provided to a trader from a market maker that may be changed prior to a transaction.
It is a reasonable estimate of a currency pair’s current market price that is provided by a market maker upon request.
This means that the quoted price may not be available to trade on.
The market maker is not obligated to honor the quote.
The opposite of an indicative quote is a firm quote, which is guaranteed by the market maker.
Market makers might provide an indicative quote if a trader indicates the possibility of a trade, but does not indicate the volume (“size”) of the transaction.
Traders can use indicative quotes as an estimate of the current exchange rate for a particular FX trade.
For example, when asked for an indicative quote in EUR/USD, a market maker might quote 1.1040/42.
This means that the indicative bid price is 1.1040 and the indicative ask price is 1.1042.
But their actual dealing price or “firm quote” might change to 1.1042/44 without any obligation to honor the original indicative quote.
An indicative quote is also called “price indication” or just “indication“.