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 EUR USD 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 EUR USD example:

Example of How to Trade EUR USD Currency Pair - Base Currency and Quote Currency

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

EUR USD

• 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.

EUR USD Exchange Rate Explained

If EUR USD 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

EUR USD - 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 EUR USD 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.