Module 1: Forex Fundamentals
Base and Quote Currency
4 min read
The first currency in a pair is the base; the second is the quote.
Reading the price
In GBP/USD = 1.2700, GBP is the base and USD is the quote. The price tells you that 1 unit of the base costs 1.27 units of the quote.
Profit and loss on a trade is first calculated in the quote currency and then converted to your account currency.
Example: Why this matters for calculations
Trading USD/JPY in a USD account: profits are first measured in yen, then converted to dollars. That is why pip values differ between pairs.
Key takeaways
- Base = first currency, quote = second.
- The price is how much quote currency buys one base unit.
- P/L is calculated in the quote currency first.
Educational content only, not financial advice. Trading forex and CFDs involves significant risk of loss.