How a currency pair works
A currency pair prices one currency against another. The first currency is the base, the second is the quote, and the price tells you how much quote currency buys one unit of the base. EUR/USD at 1.0856 means one euro buys 1.0856 US dollars. When you buy the pair you are long the base and short the quote at the same time; every forex trade is a bet on the relationship between two economies, never on one in isolation.
Worked example
You buy EUR/USD at 1.0856 expecting the euro to strengthen against the dollar. It rises to 1.0900, a move of 44 pips. On a standard lot that is about $440. If instead the dollar had strengthened, the pair would fall and you would lose. You did not need a view on the euro alone, only on the euro relative to the dollar.
Majors, minors, and exotics
Majors pair the US dollar with another top economy (EUR/USD, USD/JPY, GBP/USD) and carry the deepest liquidity and tightest spreads. Minors are crosses without the dollar (EUR/GBP, GBP/JPY). Exotics pair a major with an emerging-market currency (USD/TRY) and carry wider spreads for sharper moves. Volity offers 40+ pairs across all three groups, with leverage capped at 30:1 on majors for retail under CySEC rules.
Why it matters
Reading the base and quote correctly is the first skill in forex; reversing them flips your entire position direction. Start on a single liquid major, learn how its two economies drive it, and add pairs only once the mechanics are second nature. Related: leverage.
Read the full breakdown in our forex trading guide.
