What Does Base Currency Mean?
The first currency quoted in a currency pair on forex. It is also typically considered the domestic currency or accounting currency. For accounting purposes, a firm may use the base currency to represent all profits and losses.
It is sometimes referred to as the ”primary currency”
Base Currency
For example, if you were looking at the CAD/USD currency pair, the Canadian dollar would be the base currency and the U.S. dollar would be the quote currency. The price represents how much of the quote currency is needed for you to get one unit of the base currency.
The base currency is the first currency shown in the pair (ie. GPB/USD the GPB is the base currency)
• An ask price is the price you can buy the base currency (at the same time selling the counter currency)
• A bid price is the price you can sell the base currency (at the same time buying the counter currency)
Long/short
• Going long is when you stand to make money if the currency rate will rise (ie. buying first, as the market is low and when it rises you would sell)
• Going short is when you stand to make money if the currency rate will fall (ie. selling first, as the market is high and as it drops you buy)
• Spread is the difference between the bid price and the ask price
• If a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening”