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In the world of forex trading, you need to understand how the price of currency pairs move and what affects the changes in the foreign exchange market. 

There’s no shortcut to forex trading success.  Little by little, forex traders should learn every concept associated with the trade, the most basic of which is the currency pair. 

The currency pair is composed of the base currency and the quote currency.  To derive a value for one currency, it has to be compared with another.  If you have a currency pair of USD/EUR, the base currency is the US dollar, and the quote currency is the euro. 

If the quote for USD/EUR currency pair is 3, this means that 1 US dollar is equivalent to 3 euros.  Simply put, you need 3 euros to buy 1 US dollar, which is the base currency. 

Another way to look at is it is that by selling 1 US dollar, you get 3 euros.   The base currency and the quote currency are important elements for determining the exchange rate.

Profit is derived by the price movement of the currency pair.  Traders may hold on to their currencies and sell them when they see a favorable price structure for the currency pair, composed of the base currency and the quote currency.  

The base currency can also be used for accounting purposes.  The base currency represents the gains and losses experienced by the company or a firm at a certain period. 

In many countries, the common base currency used is the US dollar, especially if the economy is greatly affected by the US dollar exchange.  In some cases, base currency is also known as primary currency.