In this article, We learn about "Counter Currency ".Let's Go!
In Forex trading, " Relative Currency ", also known as Quote Currency, is the second currency listed in the currency pair quote.
A Forex currency pair represents the exchange rate between two different currencies and tells you how much of the counter (or quote) currency you need to buy one unit of the base currency (i.e. the first currency listed in the currency pair).
For example, in the EUR/USD currency pair, USD is the counter currency .
If a currency pair is trading at 1.20, it means you need $1.20 to buy 1 Euro.
The movement of a forex pair usually depends on the relative strength of the counter currency relative to the base currency.
If the counter currency strengthens relative to the base currency, the value of the currency pair will decrease. Conversely, if the counter currency weakens, the value of the currency pair increases.
Traders make Forex profits by anticipating these changes in relative strength and trading accordingly.
Knowing the two currencies in a currency pair is important because economic news or events affecting one of the currencies can have a significant impact on the pair's exchange rate.
If you want to learn more foreign exchange trading knowledge, please click: Trading Education.
