COURSE 1 · FOREX FOUNDATIONS · LESSON 3
Currency Pairs Explained
Base, quote, majors, crosses and exotics — plus the part most guides leave out: why the same 20-pip move pays a different amount depending on the pair you traded.
Updated 2026-09-05 · Educational content · No broker owns this site
Quick answer. A currency pair is two currencies quoted as one price. The first is the base, the second is the quote, and the price says how much quote currency buys one unit of the base. EUR/USD at 1.0850 means one euro costs $1.0850.
What is a currency pair, exactly?
A currency pair is two currencies quoted as a single price, like EUR/USD or USD/JPY. You never buy a currency on its own in forex, because a currency has no price by itself — it only has a price against something else. Asking "what is a euro worth?" is like asking whether something is expensive: expensive compared to what?
So every forex trade is two actions in one click. Buy EUR/USD and you buy euros and pay for them with US dollars at the same moment. Sell EUR/USD and you do the reverse. That is the whole idea, and it is why the market quotes pairs rather than prices. If you have not yet read what forex actually is, start there and come back.
What do base currency and quote currency mean?
The two slots in a pair have names, and they never swap around:
- The base currency is the first one. It is the thing being priced, and the quantity is always exactly one unit.
- The quote currency is the second one. It is what you pay with, and the price is measured in it.
Put those together and the exchange rate answers one fixed question: how much quote currency does it take to buy one unit of the base?
Worked example, both directions
EUR/USD = 1.0850. Base is EUR, quote is USD. One euro costs $1.0850. Buy 1,000 euros and you hand over 1,000 × 1.0850 = $1,085.
USD/JPY = 150.00. Now the roles flip: base is USD, quote is JPY. One dollar costs ¥150. The dollar is no longer what you pay with — it is what you are pricing. This flip is the single most common thing beginners get backwards, and it matters later when we work out what a pip is worth.
How do you read any forex quote in ten seconds?
Three steps, in order, and they work on every pair:
- Split at the slash. Left is base, right is quote. Nothing about your own intentions changes this — the notation decides it.
- Say "one unit of the base costs ___ of the quote." Read the number out loud in that sentence. GBP/USD at 1.2500 becomes "one pound costs 1.25 US dollars."
- Ask what a rise would mean. If the number goes up, the base is getting stronger against the quote. GBP/USD rising from 1.2500 to 1.2600 means the pound bought more dollars than before.
That third step is what turns a quote into a trade. Buying a pair is a bet that the base strengthens against the quote; selling it is the opposite bet. Lesson 2 walks one full trade through that process with the entry, the exit and the costs.
What are majors, minors and exotics?
Pairs get sorted into three groups. The dividing line is simple: does the US dollar appear, and how heavily traded are the currencies involved?
| Group | The rule | Examples | What the BIS 2025 survey shows |
|---|---|---|---|
| Majors | Always include the US dollar | EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD | The ten most-traded pairs in the world all involve the US dollar |
| Crosses (minors) | Two heavily traded currencies, neither of them the dollar | EUR/GBP, EUR/JPY, GBP/JPY, AUD/JPY | None of them reaches the top ten, precisely because none contains the dollar |
| Exotics | One major currency plus one from a smaller or emerging economy | USD/MXN, EUR/TRY, USD/ZAR | BIS reports individual turnover shares for ten currencies; the peso, lira and rand are not among them |
Notice what is not in that table: typical spreads. Plenty of pages publish a tidy column of "typical spread by pair," but those numbers change by broker, by account type and by time of day, and we could not source them to anything you could check. So we left the column out rather than invent it. What we can say is directional and comes straight from turnover data: the pairs with the heaviest trading tend to be the cheapest to trade, and exotics sit at the other end.
Which currencies are actually traded the most?
The Bank for International Settlements surveys the whole market every three years. Its April 2025 survey put total OTC foreign exchange turnover at $9.6 trillion a day, up 28% from $7.5 trillion in 2022. Here is how that splits by currency.
| Currency | On one side of this share of all trades, April 2025 | Versus 2022 |
|---|---|---|
| US dollar | 89.2% | Up from 88.4% |
| Euro | 28.9% | Down from 30.6% |
| Japanese yen | 16.8% | Roughly unchanged |
| Pound sterling | 10.2% | Down from 12.9% |
| Chinese renminbi | 8.5% | Up, continuing a rise since 2013 |
| Swiss franc | 6.4% | Up; now the sixth most traded |
Two things to understand before you quote those figures anywhere. First, they add up to about 200%, not 100% — every trade has two currencies, so each trade is counted on both sides. Second, the BIS release states that the top ten pairs all involve the dollar, but it does not publish a percentage for EUR/USD itself, so neither do we. You will see a specific EUR/USD share quoted confidently all over the internet; it is not in the source it is usually attributed to.
Why does the pair you pick change what a pip is worth?
Here is the part most introductions skip, and it is the reason base and quote are worth understanding rather than memorising.
A pip is a distance, not an amount of money. For most pairs it is the fourth decimal place; on yen pairs it is the second. What that distance is worth depends on your position size and on which currency the profit lands in — and that is the quote currency.
Take one mini lot (10,000 units) and a 20-pip move, with a US-dollar account:
| Pair | Quote | One pip | Pip value per mini lot | 20-pip move |
|---|---|---|---|---|
| EUR/USD | US dollar | 0.0001 | $1.00 | $20.00 |
| EUR/GBP | Sterling | 0.0001 | £1.00 = $1.25 | $25.00 |
| USD/JPY | Yen | 0.01 | ¥100 = $0.67 | $13.33 |
The arithmetic, so you can redo it: 0.0001 × 10,000 = 1 unit of the quote currency per pip. On EUR/USD that unit is already a dollar. On EUR/GBP it is a pound, worth $1.25 at an example rate of GBP/USD 1.2500. On USD/JPY the pip is 0.01, so 0.01 × 10,000 = ¥100 per pip, which is $0.67 at an example rate of 150.00. Multiply by 20 pips and you get the last column.
So "I risk 20 pips" is not a statement about money until you say which pair. The same stop-loss is a different amount of your account on each of those three lines — roughly a quarter more on one and a third less on another. That is why position size has to be worked out per pair rather than carried over out of habit, and it is the mechanism behind setting a fixed risk per trade.
Which pairs should a beginner start with?
The conventional answer is the majors, and the turnover data supports it: the pairs that trade most heavily are generally the ones where the price you see is closest to the price you get, and where the spread takes the smallest bite out of a trade. Exotics sit at the opposite end — thinner trading, wider spreads, sharper moves.
Three practical suggestions for a first month:
- Pick one pair and stay on it. One pair is a set of habits: how far it typically moves, what a pip is worth, when it is quiet. Ten pairs is ten sets of habits and no fluency in any of them.
- Prefer a pair quoted in your account currency if you have one available. It removes the conversion step and makes your risk easier to check in your head.
- Leave exotics alone for now. Wider spreads mean you start each trade further behind, and the larger swings mean a normal-sized position can lose more than you planned.
A caution about volatility. Bigger price swings are often sold as bigger opportunity. They are equally bigger losses, and on a leveraged account the loss arrives faster than most beginners expect. Trading forex carries a real chance of losing the money you put in, and the regulators’ own published figures show most retail accounts do lose it — we go through those numbers in is forex a scam?. Sizing your position deliberately matters more than which pair you pick.
Once you have chosen a pair, the next question is how much of it to buy. That is a calculation, not a feeling — and the pip values above are exactly the input it needs.
Frequently asked questions
What is the difference between the base and the quote currency?
The base currency is the first one in the pair and is always exactly one unit. The quote currency is the second one, and the price is measured in it. In EUR/USD, EUR is the base and USD is the quote, so 1.0850 means one euro costs 1.0850 US dollars.
Why is a pip worth a different amount on different pairs?
Because your profit is earned in the quote currency. One pip on a mini lot is one unit of the quote currency, so it is $1 on EUR/USD but £1 on EUR/GBP, which then has to be converted into your account currency. Yen pairs differ again because their pip is the second decimal place.
What is a cross or minor pair?
A cross, also called a minor, is a pair of two heavily traded currencies that does not include the US dollar — EUR/GBP or AUD/JPY, for example. According to the BIS 2025 survey, the ten most-traded pairs in the world all involve the dollar, so crosses sit outside that group.
Does buying EUR/USD mean I own euros?
In a retail trading account you hold a position in the pair rather than physical euros. Economically it works the same way: you gain if the euro strengthens against the dollar and lose if it weakens. The position is opened and closed in your account currency.
How many currency pairs should a beginner trade?
One is enough to start with. Each pair has its own typical daily range, its own pip value and its own quiet and busy hours, and learning those takes repetition. Adding pairs multiplies what you have to track without adding anything to what you understand.
Sources
- BIS, “OTC foreign exchange turnover in April 2025”, Triennial Central Bank Survey, 30 September 2025
- BIS press release, “Global FX trading hits $9.6 trillion per day in April 2025”, 30 September 2025
- FirstPip knowledge base — Currency Pairs: Base, Quote and the Three Types (sources S004, S005, S013)
- FirstPip knowledge base — Pip Value: Turning Pips Into Money (sources S010, S011)
- FirstPip knowledge base — Pips and Pipettes: Measuring Price Movement (sources S006, S010, S011, S013)