Market StructureCounter CurrencyTerms Currency
Quote Currency
The second currency in a pair - the one the exchange rate is expressed in and in which profit and loss accrue.
What Quote Currency means
The quote currency, sometimes called the counter or terms currency, is the second currency listed in a pair. The exchange rate states how many units of the quote currency are needed to buy one unit of the base. When you go long, you are effectively borrowing the quote currency to fund a purchase of the base, which is why the interest rate differential between the two currencies drives the overnight swap charge or credit applied to the position.
Profit and loss on a forex position is generated in the quote currency before being converted into your account currency. This matters for pip value: on pairs quoted in US dollars a pip is worth a fixed 10 dollars per standard lot, while on pairs with a different quote currency the pip value floats with that currency's exchange rate. Traders sizing positions across several pairs need to recalculate rather than assume a uniform value per pip.
Worked example
On USD/JPY at 152.40 the quote currency is the yen, so one pip on a standard lot is 1,000 yen, which converts to roughly 6.56 US dollars at that rate.
Related terms
- Base CurrencyThe first currency in a pair - the one being bought or sold, and the unit in which position size is measured.
- Currency PairTwo currencies quoted against each other, expressing how much of the second currency one unit of the first is worth.
- PipThe standard smallest conventional price increment in a currency pair - the fourth decimal place, or the second on yen pairs.
- SwapThe interest credited or debited for holding a forex position overnight, based on the two currencies' rate differential.
- Currency Conversion FeeA charge applied when converting between the account's base currency and the currency of a trade or transfer.
Frequently asked questions
What does Quote Currency mean in forex trading?
The second currency in a pair - the one the exchange rate is expressed in and in which profit and loss accrue.
How does Quote Currency work in practice?
Profit and loss on a forex position is generated in the quote currency before being converted into your account currency. This matters for pip value: on pairs quoted in US dollars a pip is worth a fixed 10 dollars per standard lot, while on pairs with a different quote currency the pip value floats with that currency's exchange rate. Traders sizing positions across several pairs need to recalculate rather than assume a uniform value per pip.
What is an example of Quote Currency?
On USD/JPY at 152.40 the quote currency is the yen, so one pip on a standard lot is 1,000 yen, which converts to roughly 6.56 US dollars at that rate.
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