Welcome to our Free Course
Enhance your trading knowledge by studying our legendary free online program!
  • Beginner
  • Intermediate
  • Advanced
  • Completion
  1. Beginner
    Early Stages for Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
  4. Intermediate
    Identifying Scams
    2 Topics
  5. Brokers for Beginners
    5 Topics
  6. Technical Analysis
    13 Topics
  7. Advanced
    Using Indicators
    6 Topics
  8. Technical Analysis (Part 2)
    8 Topics
  9. Market Structure
    5 Topics
  10. Fundamental Analysis
    9 Topics
  11. Completion
    Risk Management for Beginners
    8 Topics
  12. Psychology for Beginners
    7 Topics
  13. Personal Psychology Questions
    2 Topics

Basic Forex Terminology

If you’re new to this market, the terminology can be quite daunting! It’s imperative to familiarize yourself with the basic terms and definitions; otherwise, you may end up completely lost before you’ve even begun. You might start to believe we’re out here trading bulls, bears, and even ticks!

As we mentioned earlier, currencies are typically quoted together in pairs. You’re essentially assessing which country is stronger in comparison to the other. Now that you know this, let’s run through some definitions that you need to know when trading these pairs!

The first currency in a pair is known as the BASE CURRENCY, while the second currency is called the QUOTE CURRENCY. So if you see the pair EUR/USD, EURO is the Base Currency and the US Dollar is the Quote Currency. You are TRADING based off the BASE CURRENCY.

Example: If you believe that the Euro will rise in comparison to the US dollar, you should buy EUR/USD, as the Euro is the base currency. If you believe the US dollar will rise in comparison to the Euro, you should sell EUR/USD, because you are trading based on the base currency. If the US Dollar rises, that means Euro has to drop, so again, you would sell EUR/USD.

Just as we talked about in the earlier sections, below is how you would read a currency pair quote:

EUR/USD – 1.25650 (1 Euro = 1.25 US Dollars)
GBP/USD – 1.40422 (1 British Pound = 1.40 US Dollars)
USD/CAD – 1.22050 (1 US Dollar = 1.22 Canadian Dollars)