Base, quote, majors, crosses and exotics — and how to read any pair on sight.
beginner · 4 min read · 10 XP
Every price you will ever look at in forex is a pair. This lesson makes the notation second nature: which currency is which, what the number means, and how the main pair categories differ in cost and behaviour.
A pair is written as two currency codes, sometimes with a slash: EUR/USD, GBP/JPY, AUDUSD.
The number tells you how many units of the quote currency one unit of the base currency is worth.
So if EUR/USD is quoted at 1.0850, one euro buys 1.0850 US dollars. If GBP/JPY is 189.40, one pound buys 189.40 Japanese yen.
The sentence worth memorising
"One unit of the base, priced in the quote." Every other confusion about direction dissolves once that is automatic.
From that single sentence everything else follows:
The dollar (base) weakened against the Swiss franc (quote). One dollar now buys fewer francs. If you had sold USD/CHF you would be in profit, because you sold dollars and bought francs before the franc appreciated.
Majors are the seven pairs that include the US dollar and one other heavily traded currency:
| Pair | Nickname | Currencies |
|---|---|---|
| EUR/USD | Fiber | Euro / US dollar |
| USD/JPY | Gopher | US dollar / Japanese yen |
| GBP/USD | Cable | British pound / US dollar |
| USD/CHF | Swissy | US dollar / Swiss franc |
| AUD/USD | Aussie | Australian dollar / US dollar |
| USD/CAD | Loonie | US dollar / Canadian dollar |
| NZD/USD | Kiwi | New Zealand dollar / US dollar |
These carry the deepest liquidity and the tightest spreads. EUR/USD alone is roughly a fifth of all forex volume. If you are learning, trade these.
Crosses are pairs without the US dollar: EUR/GBP, AUD/JPY, EUR/CHF, GBP/AUD. They are perfectly tradeable, but spreads are wider and moves can be larger, because a cross effectively combines two dollar pairs. GBP/JPY has a long-standing reputation for volatility for exactly this reason.
Exotics pair a major currency with a smaller or emerging-market economy: USD/TRY, USD/ZAR, USD/MXN, EUR/PLN. Wide spreads, thin liquidity, sharp gaps, and vulnerability to political events that are hard to anticipate from outside the country. Interesting to watch; a poor place to learn.
The category is not trivia — it changes the arithmetic of a trade.
A 20-pip stop on EUR/USD might cost you 0.6 pips in spread. The same stop on an exotic might cost 15 pips in spread before the trade has done anything. The trade needs to move meaningfully further just to break even, and that shifts your expectancy before you have taken a single view on direction.
A common beginner trap
"I'll trade the exotic because it moves more." Larger moves are not free. They come with wider spreads, worse fills, larger overnight swap charges and a greater chance of a gap through your stop. Movement you cannot afford to sit through is not opportunity.
A broker shows two prices, not one:
EUR/USD 1.08472 / 1.08484
bid ask
The gap between them is the spread, here 1.2 pipettes, or 0.12 of a pip. You always cross that gap on entry, which is why every position starts marginally negative.
Which pair would you pick to learn on?
Interactive exercise — enable JavaScript to try it.
What to remember
A currency pair prices one unit of the base currency in the quote currency. Majors are the dollar pairs with the deepest liquidity and tightest spreads, crosses exclude the dollar, and exotics carry costs that can quietly dominate a small trade. Quotes are always two-sided — bid to sell, ask to buy.