The Forex currency pairs are usually traded and quoted with a ‘bid’ and ‘ask’ price. The ‘bid’ is the price at which the broker is willing to buy and the ‘ask’ is the price at which he is willing to sell.
For example, if the USD/EUR currency pair is quoted as - USD/EUR = 1.5 and you
purchase the pair, this means that for every 1.5 euros that you sell, you get US$1. If you sold the currency pair, you receive 1.5 euros for every US$1 you sell.
Base Currency
This is the first currency quoted in a Forex currency pair. It is also known as domestic currency or accounting currency and sometimes referred to as the primary currency of a Forex currency pair. For example, CAD/USD currency pair. Here the Canadian dollar is the base currency while the U.S. dollar is the quote currency.
The price represents how much of the quote currency is needed to get one unit of the base currency.
Quote Currency
This is the second currency quoted in a Forex currency pair. This is also referred to as the foreign currency, secondary currency or counter currency.
