Base & Quote Currency

In a currency pair, the base currency is the first-listed unit being priced, and the quote currency (also called the counter or terms currency) is the second, in which that price is expressed. The quoted number is therefore the amount of quote currency required to buy one unit of base currency. Buying ("going long") the pair means acquiring the base and giving up the quote; selling ("going short") means the opposite. Your pip value and your profit or loss are originally denominated in the quote currency, which may then be converted to your account currency. Identifying base and quote correctly is what makes a price intelligible and is a prerequisite for understanding pips, lot sizing, and swaps.

In plain English — In any currency pair written as BASE/QUOTE, the base currency is the first one and the quote currency is the second. The price tells you how much of the quote currency equals one unit of the base. When you buy the pair you are buying the base and paying with the quote; when you sell, you do the reverse. Knowing which is which is essential for understanding what a price actually means and which currency your profit is denominated in.

In EUR/USD = 1.1000, the euro is the base and the US dollar is the quote — it takes 1.10 dollars to buy 1 euro. In USD/JPY = 150.00, the dollar is the base and the yen is the quote.