Base Currency
The first currency in a pair — the one being bought or sold.
Also called: first currency
In plain language
In EUR/USD, the euro is the base currency. The quote tells you how many dollars one euro costs.
Position size in forex is denominated in units of the base currency. A standard lot of EUR/USD is 100,000 euros.
When the pair rises, the base currency is strengthening relative to the quote currency.
Why it matters
Lot sizes are measured in base currency units, so the base currency determines what your position size actually represents.
Common mistakes
- Mixing up which currency you are actually long.
- Assuming position value is in your account currency when it is in the base currency.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
The second currency in a pair — the one the price is expressed in.
Two currencies quoted against each other, showing how much of one buys the other.
The standardized unit of trade size in forex.
How much one pip of movement is worth in your account currency, given your position size.
The most heavily traded currency pairs, all involving the US dollar.