What is a Base Currency?
Definition of Base Currency: Base Currency is described as the first currency offered in a quote that involves currencies. Dealing with the currencies can be a bit confusing at the initial stage as one has to at first handle the currency pair. The initial currency in this pair is known as the base money. The other currency is this pair is known as counter currency and quote currency. Most of you might not be aware of the term “quotation.” This term defines the number of units present in the counter currency which are needed to purchase a single unit of currency. The quote of a exchange pair generally consists of two costs. It is found that the bid is generally lesser than the “ask”. It is the cost at which the market maker tries to purchase the base currency by exchanging the money. Ask or offer which is generally higher than the Bid is described as the cost based upon which the broker tries to vend the base currency by exchanging the quote currency. It is found that most of the Forex trading brokers derive their gains from the difference between the bid price and offers price, known as spread.