What is the Base Currency in a Currency Pair?
The first currency in a currency pair is called the Base Currency. It stands first in the codes of currency rates, and the rate shows how much the Base Currency is worth when measured against the second currency. In the Currency Pair of US Dollar versus Swiss Franc (USD/CHF), the US Dollar is the Base Currency. What are PIPs? PIPs are “Price Interest Points” that are set up by mathematical formulae according to the exchange rate of each particular Currency Pair. Each PIP or “point” is the smallest unit of price for any foreign currency. In the USD/CHF Currency Pair, fr example, a PIP equals .0001 Swiss Francs. A trader tries to capture as many PIP points as possible. What is Margin Trading in the Foreign Exchange? When you buy an option to buy or sell a currency, you pay based on how many units of a currency you will be entitled to buy or sell in this transaction. The more US Dollars you want the option to buy (or sell) at a specific price, the more you will have to pay. This is becaus
