How to Trade Forex Currency Pairs Explained - Currency Pairs Exchange Rate Example Explained

To learn how to trade forex currency pairs we shall use the EURUSD currency pair to explain how to trade forex currency pairs.

To trade a forex currency pair there is the base currency and the quote currency. The base currency and the quote currency are explained below using the EURUSD example:

Example of How to Trade EURUSD Currency Pair - Base Currency and Quote Currency

EURUSD currency pair is one of the major forex currency pair in the forex trading market, therefore we shall use this EURUSD currency pair for our example:

EURUSD

• Base Currency - EUR

Base Currency is the first currency in a currency pair (EUR). The Base currency is equal to 1 unit of the first currency.

• Quote Currency - USD

Quote Currency is the second currency in a currency pair (USD). The Quote currency shows the value of the base currency in relation to the second currency.

EURUSD Exchange Rate Explained

If EURUSD currency exchange rate quote = 1.2000

It means the ratio of EUR : USD = 1 : 1.2000

Therefore it means 1 Euro = 1.2000 US dollars

Example of forex currency exchange rates on MT4 Platform

How to Trade Forex Currency Pairs Explained - Currency Pairs Exchange Rate Explained

EURUSD - Forex Currency Pair

In this case The EUR is the base currency and USD is the quote currency.

The base currency is always 1 unit, and the exchange rate quote is in terms of the quote currency.

Therefore, if exchange rate of EURUSD currency pair = 1.20000, it means 1 Euro is equal to 1.2 US dollars. So for every 1 Euro you have, you can buy 1.2 dollars.