First in the pair, the one you price:one unit of base, at what the quote will slice.
The first currency in a currency pair.
In EUR/USD, the euro is the base currency. Exchange rates show how much quote currency is needed to buy one unit of the base currency.
In plain words
In a currency pair the base currency is the one written first. The price of the pair is the price of one unit of the base currency, expressed in the second currency, which is called the quote currency. Buying the pair means buying the base currency and selling the quote currency.
See it move
EUR (base) rises against USD (quote): the pair’s price goes up
Why it matters
Trade size is counted in the base currency: one standard lot of EUR/USD is 100,000 euros, not 100,000 dollars. Profit and loss, by contrast, arise in the quote currency.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
In an invented example EUR/USD is at 1.1000 and a trader buys one standard lot.
- 1The base currency is the euro, so the size is 100,000 euros
- 2Value in the quote currency = 100,000 × 1.1000 = 110,000 US dollars
- 3A rise of 10 pips = 10 × 10 = 100 US dollars
The trader has bought 100,000 euros against 110,000 US dollars, and gains or losses are counted in dollars.
A common mistake
It is tempting to think the base currency is the stronger or more important of the two. The order is a market convention: it says which currency is being priced, and nothing about its strength.
Check yourself
Learn more
- Academy lessonIntroduction to forex tradingWhat the foreign exchange market is, how currency pairs are quoted, when the four sessions trade and what a newcomer should learn first.
- Academy lessonUnderstanding currency pairsBase and quote currencies, bid and ask, the spread, and the difference between major, minor and exotic pairs.
Educational information, not investment advice or a recommendation to trade.