Forex Trading is about speculating on the fluctuating currencies between two countries. These two currencies are referred to as “Currency Pairs‘ and they are made up of the “Base Currency” and the “Quote Currency“. A famous example of a currency pair is the Euro against the US Dollar, which is presented as EUR/USD. In the Forex market, currency unit prices are quoted as currency pairs.
In other words, a currency pair is the quotation of two different currencies, with the value of one currency being quoted against the other. The first currency of a currency pair is called the “Base Currency“, and the second currency is called the “Quote Currency“.
The Base Currency also known as the Transaction Currency is the first currency set that appears in a forex Currency Pair. It’s the one that’s bought or sold for the Quote Currency. In the EUR/USD, the EUR is the base currency.
The Quote Currency, also called “Counter Currency,” is the second currency in currency pair and is used to determine the value of the base currency. Quote currency is also known as the “secondary currency.” In the EUR/USD, the USD is the quote currency or counter currency.