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Currency Pair

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In FOREX markets, a currency pair is a price quote showing how much an investor will need of one currency to buy one unit of another currency. A currency pair is shown as a ratio of currency symbols. For example, in the EUR/USD currency pair, EUR is the base currency and the USD is the counter currency. The base currency in any currency pair is the currency the investor will buy or sell. The counter currency in any currency pair is the currency the investor will use to purchase or sell the base currency. For example, when an investor buys one EUR/USD currency pair quoted at 1.5000 in FOREX, this investor will spend 1.5 dollars to buy 1 euro. On any FOREX trading platform, a currency pair will have 2 quotes: a bid and an ask. Except in the case of a Yen based currency pair, a currency pair quote is typically shown to four decimal places. A currency pair can be traded 24 hours a day, 5 days a week. Most commonly traded currency pairs are also called the majors (i.e. EUR/USD, USD/CHF, USD/JPY, GBP/USD). A currency pair that does not involve the US Dollar is called a cross currency.



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