Currency pair

A currency pair shows how many units of the second currency you need to buy one unit of the first, for example EUR/USD at 1.0850.

In forex you always exchange one currency for another, which is why prices are quoted in pairs. In EUR/USD, the euro is the base currency and the dollar is the quote currency: at 1.0850, one euro is worth 1.0850 dollars.

Buying the pair means buying the base currency and selling the other one. If you think the euro will strengthen against the dollar, you buy EUR/USD; if you think the opposite, you sell it.

Pairs fall into three groups: majors (the dollar against another big currency), crosses (no dollar, such as EUR/GBP) and exotics (with an emerging-market currency, such as USD/TRY). As a rule, the more a pair trades, the tighter its spread.

The full lessonCurrency pairs: how to read a quote, the bid, the ask and the spreadBase currency, quote currency, bid and ask prices, spread: learn to read a forex quote such as EUR/USD 1.0850 and to tell major, minor and exotic pairs apart.