The Market
Module 3 — Base and Quote Currency
In every pair, the first currency is the base and the second is the quote (or counter) currency. The price tells you how much of the quote currency it takes to buy one unit of the base.
| Pair | Base | Quote | Reading of 1.2500 |
|---|---|---|---|
| GBPUSD | GBP | USD | £1 = $1.2500 |
| EURGBP | EUR | GBP | €1 = £1.2500 |
| USDCAD | USD | CAD | $1 = C$1.2500 |
Buying the pair means buying the base and selling the quote. Selling the pair means the reverse. There is no separate instrument for going short — selling is as natural as buying, which is why traders can profit in falling markets.
Key concepts
- The base is listed first
- The quote is listed second
- The quote shows the cost of one base unit
Practical example
In USDJPY, USD is the base and JPY is the quote; buying means buying dollars while selling yen.
Common mistake
Reversing the base and quote when interpreting a buy or sell.
Knowledge check
Check your understanding
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