Every forex quote involves two currencies. In EUR/USD, the euro (EUR) is the base currency and the US dollar (USD) is the quote currency. The price tells you how much of the quote currency you need to buy one unit of the base.
If EUR/USD = 1.0850, you need $1.085 to buy €1. If the price rises to 1.0900, the euro has strengthened — you now need more dollars per euro. If it drops to 1.0800, the euro weakened.
Major pairs all include the USD: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD, NZD/USD. These have the highest liquidity, tightest spreads, and most predictable behaviour. EUR/USD alone accounts for roughly 23% of all forex volume.
Minor pairs (crosses) exclude the USD but include other major currencies: EUR/GBP, GBP/JPY, AUD/NZD. They have decent liquidity but slightly wider spreads.
Exotic pairs combine a major currency with one from an emerging economy: USD/TRY, EUR/ZAR, GBP/SGD. These carry wider spreads, higher volatility, and more risk — but also more potential reward.
Every pair has two prices. The bid is what you can sell at; the ask is what you can buy at. The ask is always slightly higher than the bid. The difference between them is the spread — your entry cost on every trade.
For example, if EUR/USD shows 1.0847 / 1.0849, the spread is 0.2 pips. On a standard lot (100,000 units), that's a $2 entry cost. Tight spreads matter — they directly affect your profitability, especially if you trade frequently.
When you see EUR/USD = 1.0850, it means 1 EUR = 1.085 USD. To convert, if you have $1,000 and want euros, divide: $1,000 ÷ 1.085 = €921.66. If you have €1,000 and want dollars, multiply: €1,000 × 1.085 = $1,085.
Understanding this is fundamental. Every trade you make starts with reading a quote correctly. Get comfortable with it now — it becomes second nature.