The "base currency" is the first currency in a currency pair. It is the first currency that traders refer to when trading, and it is the base against which all price changes are measured. It is important to note that this is not always the same as the "home currency". In fact, most traders are familiar with the euro and its home currency of euro, but (due to the widespread use of US dollars in foreign exchange markets) the US dollar is often considered as the base currency for euro/USD trades. Understanding which currency in a currency pair is the base currency is important in determining the direction of a trade or determining the overall trend.The "quote currency" or "counter currency" is the second currency in a currency pair. It is the second currency that traders refer to when trading, and it is the second base against which all price changes are measured.The "cross rate" is the difference between the two currencies in a currency pair. Often, currencies have different values against different currencies, so this indicates how one currency compares to another. A cross rate of 1.27 shows that one British pound is worth $1.27 when compared to the US dollar.The "pip" (short for "percentage in point") is a value used to measure price changes in a currency pair. Each currency pair has a "pip value" in terms of the base currency, which is usually the US dollar. For example, when one British pound is traded for $1.65 US dollars, this is called a 1-pip movement.The "spread" is the difference between the bid and the ask price of a trade. The spread is often expressed in pips or percentage points. The closer the bid and ask price are together, the smaller the spread will be.The "bid price" is the current best offer to buy a currency pair, while the "ask price" is the current best offer to sell a currency pair.
