Base and Quote Currency
In a pair such as EUR/USD, the base currency is the first one (EUR) and the quote currency is the second (USD); the price is the amount of quote currency per one unit of base currency.
Every currency or crypto pair has two parts. The base currency is the first one, the thing you buy or sell. The quote currency is the second one, the money used to price it. In EUR/USD, the euro is the base and the US dollar is the quote.
- Category
- Trading Basics
- Reading time
- 3 min
- Also called
- Base currency, Quote currency, Counter currency
- Updated
Base and quote in plain words
The base currency sets the trade size: one standard lot is 100,000 units of it.1
Profit and loss are counted in the quote currency — on EUR/USD, for example, a one-pip move on a standard lot is worth $10.1
On crypto pairs the split matters for margin too: going long uses margin in the quote currency.2
How to read a pair
Split the pair
The first code is the base, the second is the quote.
Read the price
The price shows how much quote currency buys one unit of base.
Decide direction
Buying the pair means buying the base and paying in the quote.
Size in base units
Size the trade in base-currency units — 100,000 for one standard lot.1
Count P&L in the quote
Profit and loss is first worked out in the quote currency.
Check margin currency
If you short, expect margin to be taken in the base currency instead.2
Worked examples
Example 1 — Buying EUR/USD
Gain in USDA hypothetical trader buys EUR/USD at 1.1000 and sells at 1.1050.
| Base | EUR |
| Quote | USD |
| Move | +50 pips |
With USD as the quoted currency, each pip on a standard lot is worth $10, so the result is counted in dollars.1
Example 2 — USD as base
Pip value movesA hypothetical trader holds USD/JPY, where the dollar is the base.
| Base | USD |
| Quote | JPY |
Where USD is the base currency, pip values vary with the exchange rate.1
Example 3 — Crypto short
Short losesA hypothetical trader shorts BTC/USD on margin and price rises.
| Base | BTC |
| Quote | USD |
| Price | Up |
Because this is a short, margin comes from the base currency, so the trader needs enough BTC on hand.2
Base vs quote
| Aspect | Base currency | Quote currency |
|---|---|---|
| Position | First in the pair | Second in the pair |
| Role | What you buy or sell | What you pay with |
| Lot size | Measured in it | Not used |
| P&L | Not first counted in it | Counted in it |
Where it matters
Pairs
Reading any Trading Pair.
Lot size
Working out Lot Size.
Pip value
Calculating Pip Value.
Margin
Knowing which side of Margin is used.
Advantages and disadvantages
Advantages
- Makes any pair quote easy to read.
- Explains which currency P&L is in.
- Helps size trades correctly.
Disadvantages
- Pairs can be written in different orders on different sites.
- P&L may need converting to your account currency.
- Crypto venues may use different margin rules.
- Cross pairs need extra conversion.
Going deeper
Read as far as you need. Each level builds on the one before it.
Order
Beginner
The base is always first; the price says how much quote buys one base unit.
Pip value
Intermediate
When USD is the base currency, as in USD/JPY or USD/CHF, the dollar value of a pip changes with the exchange rate.1
Margin side
Advanced
Kraken uses the quote currency for margin on longs and the base currency on shorts.2 Other venues may differ.
Common mistakes
Reading the pair backwards
Base is first.
Ignoring account currency
Convert P&L if needed.
Assuming fixed pip values
They change when USD is the base.
Mixing pairs on two sites
Check the order shown.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- The base is the first currency in a pair.
- The quote is the second.
- The price is quote per one base.
- Lots are measured in base units.
- P&L is counted in the quote.
Frequently asked questions
Is the base always EUR?
Does crypto use the same idea?
What is a counter currency?
Further learning
- Trading Pair
Pairs.
- Pip Value
Pip values.
- Lot Size
Lot sizes.
- Spot Trading
Spot markets.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- CMC Markets. Lot Size in Forex: Complete Guide to Position Sizing (opens in a new tab) Checked .
- Kraken. Margin call level and margin liquidation level (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.