Counter Currency

In forex trading, the “counter currency“, also known as the quote currency, is the second currency listed in a currency pair quotation.

A forex pair represents the exchange rate between two different currencies, and it tells you how much of the counter (or quote) currency is needed to buy one unit of the base currency, which is the first currency listed in the pair.

For instance, in the pair EUR/USD, USD is the counter currency.

If the pair is trading at 1.20, that means you need 1.20 USD to buy 1 EUR.

Movements in forex pairs are often dictated by the relative strength or weakness of the counter currency as compared to the base currency.

If the counter currency strengthens relative to the base currency, the pair’s value will decrease. Conversely, if the counter currency weakens, the pair’s value will increase.

Traders make profits in forex by anticipating these changes in relative strength and placing trades accordingly.

It’s important to be aware of both currencies in a pair, as economic news or events affecting either currency can have a significant impact on the pair’s exchange rate.

Related Terms

Forex (FX)

Forex stands for “foreign exchange” and refers to the buying or selling of one currency in exchange for another. While it is called “foreign” exchange, this is just a relative term. The terms “foreign” and “domestic” are relative to the person using the term. What is foreign to someone is considered domestic to another. “Currency exchange” […]

Forex Trading

Forex trading is the simultaneous buying of one currency and selling another. When you trade in the forex market, you buy or sell in currency pairs. As the value of one currency rises or falls relative to another, traders decide to buy or sell currencies to make profits. Retail forex traders participate in the forex market […]

Currency Pair

A currency pair is a price quote of the exchange rate for two different currencies traded in the foreign exchange market. Forex trading is the simultaneous buying of one currency and selling another. When you trade in the forex market, you buy or sell in currency pairs. Each currency in the pair is listed as […]

Quote Currency

What is Quote Currency? The quote currency is the second currency in a currency pair. It is used to determine the value of the base currency. In the forex market, currency unit prices are quoted as currency pairs. The base currency, which is also known as the transaction currency, is the first currency appearing in […]

Base Currency

What is Base Currency? The base currency is the first currency in a currency pair. It compares the values between the first currency and the second currency in a currency pair. In the forex market, currency unit prices are quoted as currency pairs. The base currency, which is also known as the transaction currency, is […]