Why EURUSD but USDJPY: quoting conventions

[Shadow Trader]

Pairs are quoted with a base and a quote currency, and the convention follows a historical hierarchy. The euro ranks highest, then the pound, then the Australian and New Zealand dollars, then the US dollar, then the Canadian dollar, the Swiss franc and the yen. The higher-ranked currency is the base.

That's why it's EURUSD but USDJPY. Euro outranks dollar, and dollar outranks yen. It also explains why GBPJPY and EURCHF exist but not JPYGBP or CHFEUR.

Why does it matter for a scalper? Because the quote currency determines pip value and which side of the pair a currency's strength shows up on. A strong dollar makes EURUSD fall and USDJPY rise. Traders new to the field often get confused about direction.

It also affects pip values in the account currency, with the quote currency setting the pip value in its own currency.

Convention differences appear among exotic pairs too, where the dollar is often the base, as in USDTRY and USDZAR, and the reverse in a few cases.

Some brokers also adjust margin or restrict trading on pairs affected by holidays, especially exotic ones, and spreads on those pairs can widen sharply on the holiday itself. A glance at the broker's notices a few days ahead is usually enough to avoid trouble.

Has direction confusion ever caused a wrong-way trade?