Currency Pair
Also known as: Forex Pair, FX Pair
The quotation of two different currencies being traded against one another.
Plain-English Meaning
In foreign exchange, you are always buying one currency while simultaneously selling another. A currency pair shows these two currencies together. The first currency is the "base" (what you are buying or selling), and the second is the "quote" (what you are using to pay for it).
Why It Matters
Currency pairs are the fundamental instruments of the forex market. Understanding how to read them is the first requirement for taking a position, calculating costs, and estimating potential returns.
Simple Example
In the EUR/USD pair, EUR is the base currency and USD is the quote. If the price is 1.1000, it means it takes exactly 1.10 US Dollars to purchase a single Euro.
This educational example uses selected assumptions for reference calculation purposes. Real conditions may vary by broker, exchange, or instrument.
Beginner Mistake
Failing to realize that taking a "short" position on a currency pair actually means selling the first currency while buying the second. The action (buy or sell) always applies to the base currency.