🧱 Basics·beginner

Base Currency

The first currency in a forex pair — the one you're buying or selling, priced in units of the second currency.

The base currency is the currency on the LEFT side of a forex pair. In EUR/USD, the base is the euro. In USD/JPY, the base is the dollar. Whatever the price says, it's telling you how many units of the second currency it takes to buy ONE unit of the base. When you go long a pair, you're buying the base currency and selling the quote currency at the same time. Long EUR/USD means buying euros, paying with dollars. The size of your position is measured in units of the base — one standard lot of EUR/USD is 100,000 EUROS, not dollars. The base currency also drives your pip value calculation when the base is the one you're funding the account with. Trade USD/JPY in a USD account and the pip value floats with the JPY exchange rate, because the profit comes back as yen and gets converted.

Real trade example

During the 2022 dollar rally, USD was strong as the base in USD/JPY (which ran from 115 to 151) but weak as the quote in EUR/USD (which fell from 1.13 to 0.95). Same dollar, opposite roles.

Related terms

Quote Currency

beginner

The second currency in a forex pair — the one used to price one unit of the base currency.

Currency Pair

beginner

Two currencies quoted together — you're always buying one and selling the other at the same time.

Pip

beginner

The smallest standard price move in a currency pair — the building block of every forex profit or loss.

Cross Pair

intermediate

A pair that doesn't include the US dollar — used to trade one non-USD currency directly against another.

Major Pair

beginner

Any forex pair that includes the US dollar and one other top-tier global currency — the most liquid pairs in the world.

Balance

beginner

The total cash in your trading account, not counting any open-trade P&L.

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