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💱Forex

Quote Currency

The second currency in a forex pair — the currency in which the price of the base currency is expressed.

Also called the "counter currency," the quote currency tells you how many units of it are required to buy one unit of the base currency. In USD/JPY at 150.00, the JPY is the quote currency: one US dollar costs 150 Japanese yen. Profits and losses on a trade are realized in the quote currency unless converted.

The distinction matters for calculating pip values and position sizing. For pairs where USD is the quote currency (EUR/USD, GBP/USD), pip values are straightforward in dollar terms. For pairs where USD is the base (USD/JPY), pip values depend on the current exchange rate and must be converted.

Keeping the base/quote relationship clear prevents costly confusion about direction. A "stronger dollar" pushes EUR/USD down (fewer dollars are needed per euro) but pushes USD/JPY up (more yen are needed per dollar). The same dollar move has opposite effects on pair prices depending on whether the dollar is base or quote.

Related terms
Currency PairBase CurrencyPipSpread (Forex)
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This definition is for informational and educational purposes only. Nothing on Finance Compass constitutes financial, investment, or trading advice. Always conduct your own research and consult a qualified professional before making financial decisions.