Counter Currency

What is Counter Currency?

In forex, every trade is quoted as a pair of two currencies; for example, EURUSD. The first one (EUR) is called the base currency, and the second one (USD) is called the counter currency.

So, counter currency is simply the second currency in the pair. It shows the value of the base currency in terms of another. For example:

• If EURUSD = 1.16280, that means 1 Euro (base) = 1.16280 US Dollars (counter currency).

What does the counter currency show?

• The value of the base: The counter currency tells you how much of it is needed to buy one unit of the base currency.
• Profit and loss measure: In most forex trades, your gains or losses are calculated in the counter currency.
• Clear price quotes: Knowing the counter currency helps you read forex pair prices correctly and avoid confusion.

Example of Counter Currency

Let’s say you’re looking at GBPJPY = 198.900:

• GBP (British Pound) = base currency
• JPY (Japanese Yen) = counter currency

This means 1 British Pound is equal to 198.900 Japanese Yen. If the number goes up, the Pound is stronger against the Yen. If it goes down, it’s weaker.