Forex glossary
Base currency
The first currency in a pair. In EUR/USD, EUR is the base currency and the rate states the number of US dollars per euro.
Illustrative example
How does it work in practice?
At a hypothetical EUR/USD rate of 1.10 USD per EUR, you buy 100 EUR for 110 USD with no fees. EUR is the base currency: 100 is its quantity.
A case to work through
A PLN account trading EUR/USD
Model: a PLN account buys 500 units of EUR/USD at 1.0800 USD/EUR.
- EUR comes first, so the quantity represents 500 EUR.
- Its quoted value is 500 × 1.0800 = 540 USD.
What follows? Separate 500 EUR of exposure, its 540 USD value and the PLN balance.
Example boundary: Contract specifications determine units and conversion.
Three different currencies
Text description of the diagram
- Quantity: 500 EUR: the position’s base quantity.
- Valuation: 540 USD at 1.0800 USD/EUR.
- Account: PLN: the separate balance currency.
A useful distinction
Base currency / quote currency (counter currency)
The quote currency expresses the price of one base-currency unit.
Check your understanding
Identify the base independently of account currency.
Show the answer and explanation
700 EUR
EUR is the pair’s first currency.
Pair units and result currency
Step 1 / 11 · 0 / 11 reviewed
View the full sequence →Progress is saved only in this browser.
Try the numbers in a calculator →
Read the fuller explanation
Related terms
Sources and documentation
- ECB: euro reference exchange rates
Currency units and reference quotations, not executable prices or invented case datasets.
- OANDA Corporation: Do you offer micro lots?
OANDA Corporation documentation states the 100,000, 10,000 and 1,000 base-unit convention and distinguishes unit-based from lot-based volume entry.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.