Base and quote currency explained: how to read any forex pair
The Nuqta Markets team · 28 October 2026 · 6 min read · How we write
In short
- The price of a pair is how many units of the quote currency one unit of the base costs.
- Profit and pip value are earned in the quote currency, then converted to your account currency.
- On a USD account, pairs quoted in USD have a fixed pip value; the others move with the exchange rate.
Every forex price is a fraction. Read it the right way round and pip values, profits and position sizes stop being mysterious; read it the wrong way round and every number after it is off. This article takes one quote apart and rebuilds it in numbers.
What the two halves of a pair mean
In EURUSD = 1.0850, the first currency (EUR) is the base and the second (USD) is the quote. The price says how many units of the quote currency one unit of the base costs: one euro costs 1.0850 dollars.
| Pair | Base | Quote | Price | Reads as |
|---|---|---|---|---|
| EURUSD | EUR | USD | 1.0850 | 1 euro = 1.0850 dollars |
| USDJPY | USD | JPY | 150.00 | 1 dollar = 150 yen |
| GBPUSD | GBP | USD | 1.2700 | 1 pound = 1.27 dollars |
| EURGBP | EUR | GBP | 0.8540 | 1 euro = 0.854 pounds |
Buying a pair always means buying the base and selling the quote at the same time. A buy of EURUSD gains when the euro strengthens against the dollar, which is when the number goes up. A sell gains when the number goes down.
Why the quote currency decides the pip value
A pip is a fixed step in the price: 0.0001 on most pairs and 0.01 on yen pairs. One standard lot is 100,000 units of the base. So one pip on one lot is:
pip value = pip size × 100,000, in the quote currency
On EURUSD that is 0.0001 × 100,000 = 10 dollars. On USDJPY it is 0.01 × 100,000 = 1,000 yen. On EURGBP it is 10 pounds. The profit lands in the quote currency first, and only then is converted into your account currency. The pip value calculator does that conversion for any pair.
Converting to a dollar account
| Pair | Pip value per lot (quote) | Conversion | Pip value per lot (USD) |
|---|---|---|---|
| EURUSD | $10 | none, quote is USD | $10.00 |
| USDJPY at 150.00 | ¥1,000 | ÷ 150.00 | about $6.67 |
| USDCHF at 0.9000 | CHF 10 | ÷ 0.9000 | about $11.11 |
| EURGBP, GBPUSD at 1.2700 | £10 | × 1.2700 | about $12.70 |
Illustrative calculation, not an expectation of results.
Two rules fall out of the table. When the account currency is the quote, the pip value is fixed. When it is the base (USDJPY, USDCHF on a dollar account), divide by the price, so the pip value drifts as the price moves. Crosses need the rate of the quote currency against the dollar.
For accounts in dirhams or riyals the extra step is simple: both are pegged to the dollar (about 3.6725 AED and 3.75 SAR per dollar), so $10 a pip is about 36.7 AED or 37.5 SAR.
Where this shows up in practice
The same 20-pip stop on 0.10 lot costs about $20 on EURUSD but about $13.30 on USDJPY at 150 and about $25.40 on EURGBP. A size copied from one pair to another carries a different risk. The lot size calculator starts from the stop and works back to the lot, so the pair's pip value is always included.
In short
The base is what you buy or sell, the quote is what the price and the profit are counted in. Work out the pip value in the quote currency, convert it, then size. Next, see how pairs differ in cost and behaviour in majors vs minors vs exotics, and how the two prices of every quote work in how to read a bid/ask quote.
Questions people also ask
What does buying EURUSD mean?
Buying EURUSD means buying euros and selling dollars at the same time. The position gains when the euro rises against the dollar, that is when the quoted price goes up.
Why is a pip 0.01 on yen pairs?
The yen has a much smaller value per unit, so yen pairs are quoted with two or three decimals instead of four or five. By convention one pip is 0.01 on those pairs and 0.0001 on most others.
Does my account currency change the pip value?
It changes the number you see, not the risk. The pip is earned in the quote currency and converted at the current rate. Because the dirham and riyal are pegged to the dollar, a USD pip value converts at a nearly fixed rate.
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