{"id":3167,"date":"2018-11-25T14:59:10","date_gmt":"2018-11-25T14:59:10","guid":{"rendered":"https:\/\/www.wasteyourtime.co\/?page_id=3167"},"modified":"2020-07-19T10:02:54","modified_gmt":"2020-07-19T09:02:54","slug":"base-currency","status":"publish","type":"page","link":"https:\/\/traders-paradise.com\/magazine\/trading-dictionary\/b\/base-currency\/","title":{"rendered":"Base Currency"},"content":{"rendered":"<h4><b>DEFINITION of Base currency<\/b><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The base currency is the coins against which exchange rates are generally quoted in a given country. <\/span><\/p>\n<h4><b>WHAT IT IS IN ESSENCE<\/b><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">For example, USD\/JPY, the US Dollar is the base money. Also EUR\/USD, the EURO is also. In trading this term has two main definitions:<\/span><\/p>\n<ul style=\"text-align: justify;\">\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It is the first price quoted in a forex pair: the two banknotes that investors use to trade forex.<\/span><\/li>\n<li style=\"font-weight: 400;\">The accounting currency is used by banks and other businesses. It is usually the domestic money of the country the company is operating in.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The second value in the pair is the quote or the counter. It represents the amount of that price which buyer has to give to buy a single unit of the base currency.<\/span><\/p>\n<p style=\"text-align: justify;\">Or,\u00a0in\u00a0other words,\u00a0this is the simple relationship behind a Forex pair.\u00a0 Where the first currency (base) is quoted against the second currency and we get its relative value.<\/p>\n<p style=\"text-align: justify;\">The most important and most traded Forex pairs have nickname<strong> Majors<\/strong>. Traders often refer them by nicknames.<\/p>\n<p style=\"text-align: justify;\">EUR\/USD \u2013 \u201cFiber\u201d<br \/>\nUSD\/JPY \u2013 \u201cYen\u201d<br \/>\nGBP\/USD \u2013 \u201cThe cable\u201d.<\/p>\n<p style=\"text-align: justify;\">(This nickname has its origins in the time when a cable under the Atlantic Ocean helped synchronize the GBP\/USD quotes.)<\/p>\n<p style=\"text-align: justify;\">AUD\/USD \u2013 \u201cAussie\u201d<br \/>\nUSD\/CAD \u2013 \u201cLoonie\u201d.<\/p>\n<p style=\"text-align: justify;\">(This nickname comes from the bird on the Canadian coin.)<\/p>\n<p style=\"text-align: justify;\">USD\/CHF \u2013 \u201cSwissy\u201d<\/p>\n<h4><b>HOW TO USE<\/b><\/h4>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Long forex trade will involve buying the base\u00a0banknote while selling the quote banknote.<\/span><\/p>\n<p style=\"text-align: justify;\">Now, we know what a Forex currency pair is. But let\u2019s find out what happens when we open a transaction on a currency pair.<\/p>\n<p style=\"text-align: justify;\">Let\u2019s say we open a long transaction on EUR\/USD at the price of 1.2000. This actually means that we buy the Euro against the US Dollar. If Euro strengthens, or US Dollar weakens or both, the price will go up. And the Euro is worth more than it did when we opened a long position.<\/p>\n<p style=\"text-align: justify;\">In this case, if we have a long position and the value of the base currency increases and when we close our transaction, we actually sell the base currency to earn a profit. We bought the base when it was cheap and we sold it when it was more expensive.<\/p>\n<p style=\"text-align: justify;\">When we go short on a currency pair, we sell the base currency against the quote\/counter currency. If the counter currency strengthens (USD in our example above) or the base currency weakens (Euro in our example) or both, the\u00a0price will go down.<\/p>\n<p style=\"text-align: justify;\">Remember, when we close a transaction we actually take the opposite trade to our initial one. However, when we buy back Euro, we do so at a lower, cheaper price. We sold it when it was expensive. And we bought it back when it was cheaper. So, we earned a profit.<\/p>\n<p style=\"text-align: justify;\">These are the basic mechanics behind a Forex trade. However, some of the most important things are to know how much to invest in a single trade. Also, when to go long or short.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>DEFINITION of Base currency The base currency is the coins against which exchange rates are generally quoted in a given country. WHAT IT IS IN ESSENCE For example, USD\/JPY, the US Dollar is the base money. Also EUR\/USD, the EURO is also. In trading this term has two main definitions: It is the first price [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":6817,"parent":3012,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"content-type":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"class_list":["post-3167","page","type-page","status-publish","has-post-thumbnail","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Base Currency | Financial Dictionary | Traders Paradise<\/title>\n<meta name=\"description\" content=\"The base currency is the coins against which exchange rates are quoted in a given country. 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