Currency pair ( English currency pair ) - the ratio of the prices of two currencies included in this pair in the foreign exchange market. This concept is widely used in the Forex market to simplify trading, because when buying one currency, a trader always sells another. The first currency in the pair is called the base, and the second is quoted.
EUR / USD
The price of this currency pair shows how many US dollars (USD) can be purchased for 1 single European currency (EUR). By opening a buy order, a trader gains EUR, while paying USD. When taking profit, the reverse operation is performed - buying USD for EUR. In this pair, EUR is the base currency. This statement is true in relation to all world currencies.
The decision which currency is the base and which is the quoted one is made by the International Organization for Standardization (ISO). ISO also defines currency codes and their order in each currency pair.
See also
- Forex trading
- Exchange rate
- Quotation