How Currency Pairs Work

Currency pairs are the language of forex. In this video, you’ll learn how pairs work, what base and quote currencies mean, how to read a currency quote like EUR/USD, and what you’re actually doing when you buy or sell.

In the forex market, currencies are always traded in pairs because the value of one currency is measured against another.

The first currency in the pair is called the base currency.

The second currency is called the quote currency.

The base currency is always equal to one unit.

The quote currency tells you how much is needed to buy one unit of the base.

If EUR/USD is trading at 1.10, it means one euro is worth one dollar and ten cents.

When you buy EUR/USD, you are buying euros and selling dollars.

When you sell EUR/USD, you are selling euros and buying dollars.

Every forex pair works the same way. The first currency is always the base, the second is always the quote, and the number tells you the exchange rate between the two.