What is a Forex Quote?

Currencies are always quoted in pairs. Some examples are GBP/USD and USD/JPY. These currencies are quoted in pairs because in every foreign exchange transaction a Forex trader is buying one currency and selling another at the same time. A typical example of a foreign exchange rate: GBP/USD = 1.800.

The first listed currency to the left of the slash ("/") is known as the base currency (in this case, the British pound is the base currency) and the following one on the right is the counter or quote currency (The U.S. dollar is quote currency in this example).

The base currency is the “product” to buy or sell; the quote currency is deemed as “currency” for buying/selling the “product”. If a Forex trader buys EUR/USD, the Forex trader are buying the base currency and selling the quote currency at the same time.

When a Forex trader is buying, the exchange rate indicates how much he/she has to pay in units of the quote currency to buy one unit of the base currency. Hence, with the above example, the Forex trader shall pay 1.800 U.S. dollar for 1 British pound. Likewise for selling, the Forex trader will receive 1.800 U.S. dollars when he/she sells 1 British pound.