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Chapter 4: Talking the talk > Quoting conventions - which currency comes first?

Quoting conventions — which currency comes first?

Every currency available for trading is represented by a three-letter ISO 4217 code and currencies are always traded in pairs. For each pair we obviously have two of these three-letter codes, such as AUD/USD if trading the Australian dollar against the United States dollar.

To the casual observer, it may not seem to make too much difference in which order these codes are written. In the example of Australian dollars and United States dollars, it is possible to use either AUD/USD or USD/AUD. However, there is a very important difference between these two variations. The fixed unit of currency on the left of any currency pair is known as the ‘base’ or ‘commodity’ currency, while the variable unit of currency on the right is known as the ‘terms’ or ‘quoted’ currency. The terms are:


  

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