Base & quote
One currency against another
Forex always compares two currencies, written as a pair like EUR/USD. The first one (EUR) is the base: the thing you buy or sell. The second (USD) is the quote: what the price is counted in. EUR/USD at 1.0850 simply means 1 euro costs 1.0850 US dollars.
Remember: Think of it as a price tag: "1 euro = $1.0850".
Buying and selling a pair
Buying a pair is called going long: you win if the base currency gets stronger (the price goes up). Selling a pair is called going short: you win if the base gets weaker (the price goes down). You can do either on any pair.
Remember: Price up = base stronger. Price down = base weaker.
Three-letter codes
Every currency has a three-letter code: USD (US dollar), EUR (euro), GBP (British pound), JPY (Japanese yen), CHF (Swiss franc), AUD (Australian dollar), CAD (Canadian dollar) and NZD (New Zealand dollar). These eight cover most of the market.
Test yourself
In GBP/JPY, which is the base currency?
GBPThe base is always the first currency in the pair.
EUR/USD is at 1.0850. What does that mean?
1 euro costs 1.0850 US dollarsThe price is how much quote currency one unit of the base costs.
EUR/USD falls from 1.0850 to 1.0800. The euro has…
Weakened against the dollarEach euro now buys fewer dollars.
Which code is the Japanese yen?
JPYJPY. Pairs with the yen, like USD/JPY, are among the most traded.
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Candlr is educational. Nothing here is financial advice, and trading involves a high risk of loss.