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Trends & Analysis
News

Gold prices rise on easing Middle East tensions

News

Japan’s Nikkei 225 hits record high

News

HPE stock jumps 28% on Q2 beat, boom in AI business

News

Oil spikes over 1% as Israel intensifies attacks

News

Gold surges amid US-Iran deal prospects

News

Dow hits record closing high on US-Iran peace deal hopes

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Base currency definition

When forex trading, the base currency refers to the first currency quoted in a currency pair. It is also called the transaction currency. For accounting purposes, the base currency refers to the domestic currency which represents all profits and losses.

Currency pairs are always used in forex trading because traders sell one currency to buy another. For example, if a trader was looking at the CAD/USD currency pair, this means the Canadian dollar would be the base currency and the US dollar would be the quote currency.

When provided with an exchange rate, a currency pair shows how much of the quote currency is needed to buy one unit of the base currency. For instance, with USD/EU, the US dollar is the base currency. If it has an exchange rate of 0.8500, then it means it takes 0.85 euros to buy one dollar.

When a trader trades forex, they can either go long or short. This means that they need to know which currency in the currency pair is considered ‘strong’ or ‘weak’. If a trader expects that the base currency will rise or the quote currency will fall, they may open a long position. Conversely, if they speculate the quote currency will rise or the base currency will fall, they may open a short position.

 

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ADSS offers a range of global markets for traders, with CFD opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.

 

See all glossary trading terms

See related entries from our knowledge base:

Forex market basics

Introduction to forex market


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Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.

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