Base currency

When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell euro. Or buy euro and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long i.e., bought and a short i.e., sold side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening in relation to the other.

The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.

Base Currencies were identified as the first or the primary currency on the foreign exchange currency pair. It is otherwise known or labeled to as a domestic currency. Another name that may apply to it is accounting currency.Forex currency base has many purposes and uses, one of which is to signify every profits or revenue and losses in accounting.

The importance of one thing is not determined by its amount, value or quantity. The same may still be significantly important for an output or an outcome may not be possible without the presence of such. The same is true with the base currency. It may have a small amount but other foreign exchange instances would not be possible without the presence of it.