Mechanics
Quote currency
The second currency in a pair — the one the price is expressed in.
In EUR/USD the dollar is the quote currency: the price states how many dollars one euro is worth. Profit and loss on the pair accrue natively in the quote currency before any conversion to your account currency.
This is why pip value is constant in the quote currency but varies in your account currency whenever the two differ — the reason a conversion rate appears in pip-value calculations.
Taught in these lessons
- What is a pip? — Forex Foundations
- Correlation between pairs — Risk & Position Sizing
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