Quote currency
The second currency in a pair, the one the price is expressed in. In EUR/USD at 1.0850, the US dollar is the quote currency: one euro costs 1.0850 dollars.
Every currency pair has a base currency (first) and a quote currency (second, sometimes called the counter currency). The price tells you how many units of the quote currency one unit of the base buys.
- EUR/USD 1.0850: 1 euro = 1.0850 US dollars. The quote currency is USD.
- USD/JPY 150.00: 1 dollar = 150 yen. The quote currency is JPY.
- EUR/GBP 0.8600: 1 euro = 0.86 pounds. The quote currency is GBP.
Buying the pair means buying the base and selling the quote. If the price rises, the base has strengthened against the quote.
Why the quote currency matters
Profits and losses on a forex position are calculated in the quote currency first, then converted into your account currency. The pip value is also fixed in the quote currency: 1 standard lot is always worth 10 units of the quote currency per pip on a four-decimal pair.
Example
Illustrative figures: you buy 1 standard lot of EUR/GBP at 0.8600 and close at 0.8640, a gain of 40 pips. In the quote currency, that is 40 times 10 pounds = 400 pounds. If your account is in euros and the rate is 0.8640, the broker converts it to about 463 euros. If your account is in dollars, it converts at GBP/USD instead. Some brokers charge a currency conversion fee on this step.
Common misconception
Which currency is base and which is quote follows market convention, not personal preference. The usual priority order is EUR, GBP, AUD, NZD, USD, CAD, CHF, JPY, which is why it is EUR/USD and USD/JPY but never USD/EUR. The pip value calculator handles conversion. More in currency pairs explained.
Not investment advice. This is general information and education, written without knowledge of your circumstances. It is not a recommendation to buy or sell any instrument. Past performance is not a reliable indicator of future results. Trading leveraged products carries a high risk of losing money. Risk warning