Base and quote
In EUR/USD, EUR is the base currency and USD is the quote currency. An illustrative price of 1.0800 means one euro is valued at 1.08 U.S. dollars. Buying the pair creates exposure to the euro strengthening against the dollar; selling reverses that exposure.
A simple calculation
For a hypothetical 10,000-euro position, a move from 1.0800 to 1.0850 changes its dollar value by $50: 10,000 × 0.0050. This excludes costs and financing. Where the account currency differs from the quote currency, the result must be converted.
The contract matters
An exchange of deliverable currency, an exchange-traded futures contract and a retail OTC forex position have different terms. In retail OTC forex, the dealer can be the counterparty. Read the contract, execution rules and withdrawal terms. The cited CFTC advisory concerns the U.S. regulatory setting; protections elsewhere differ.
Sources & method
Sources support the referenced concepts. Numerical examples are hypothetical unless stated otherwise. A link does not imply endorsement.