Day 1 / 30: Forex and Crypto Basics
First, a question: What exactly does the code EUR/USD mean?
It doesn’t mean “the euro is rising and the dollar is falling.” It means: how many US dollars is 1 euro worth?
In every currency pair, the currency on the left of the slash is called the “base currency” and is always fixed at 1. The currency on the right is called the “quote currency” and tells you how much of it you get for 1 unit of the base currency.
So, for EUR/USD (assuming a quote of 1.0850):
- It means 1 euro = 1.0850 US dollars
- If the number goes up, the base currency (the euro) is getting stronger relative to the quote currency
- If the number goes down, the base currency (the euro) is getting weaker relative to the quote currency
The most common pitfalls for beginners:
1. Getting the direction wrong—a rising quote makes many people think, “The dollar is gaining,” when it’s actually the euro.
2. Inverse pairs are even trickier: USD/JPY and JPY/USD show the same thing from opposite sides. If one rises, the other must fall, so be consistent about which one you’re tracking.
3. Cross rates need to be calculated: If EUR/USD is 1.08 and USD/JPY is 157, then EUR/JPY is roughly 1.08 × 157 = 169.6. That’s how you work out a cross rate.
The same principle applies to crypto: In BTC/USDT, BTC is the base currency and USDT is the quote currency. “BTC is rising” means that the same 1 BTC can be exchanged for more USDT.
Understanding quotes is the first step to truly understanding a market chart.
Markets involve risk, so trade with caution. This content is for educational purposes only and does not constitute investment advice.
First, a question: What exactly does the code EUR/USD mean?
It doesn’t mean “the euro is rising and the dollar is falling.” It means: how many US dollars is 1 euro worth?
In every currency pair, the currency on the left of the slash is called the “base currency” and is always fixed at 1. The currency on the right is called the “quote currency” and tells you how much of it you get for 1 unit of the base currency.
So, for EUR/USD (assuming a quote of 1.0850):
- It means 1 euro = 1.0850 US dollars
- If the number goes up, the base currency (the euro) is getting stronger relative to the quote currency
- If the number goes down, the base currency (the euro) is getting weaker relative to the quote currency
The most common pitfalls for beginners:
1. Getting the direction wrong—a rising quote makes many people think, “The dollar is gaining,” when it’s actually the euro.
2. Inverse pairs are even trickier: USD/JPY and JPY/USD show the same thing from opposite sides. If one rises, the other must fall, so be consistent about which one you’re tracking.
3. Cross rates need to be calculated: If EUR/USD is 1.08 and USD/JPY is 157, then EUR/JPY is roughly 1.08 × 157 = 169.6. That’s how you work out a cross rate.
The same principle applies to crypto: In BTC/USDT, BTC is the base currency and USDT is the quote currency. “BTC is rising” means that the same 1 BTC can be exchanged for more USDT.
Understanding quotes is the first step to truly understanding a market chart.
Markets involve risk, so trade with caution. This content is for educational purposes only and does not constitute investment advice.
