Understanding Quoted Currencies in Trading Bots

A quoted currency (also called a counter currency or pricing currency) is the currency in which your trading bot's portfolio value and all performance metrics are denominated. When you trade a pair like BTC/EUR, EUR is the quoted currency—it's the "measuring stick" for all your gains, losses, and portfolio value.

What Is a Quoted Currency?

In any trading pair, there are two currencies:

When a trading bot operates with EUR as its quoted currency:

• All positions are valued in EUR
• Profits and losses are calculated in EUR
• Performance metrics (CAGR, Sharpe Ratio, etc.) are measured in EUR
• Your portfolio's total value is expressed in EUR

Why Quoted Currencies Matter

Portfolio Valuation

Your entire portfolio is measured in the quoted currency:

$$\text{Portfolio Value} = \sum(\text{Asset Quantity} \times \text{Asset Price in Quoted Currency})$$

Example with EUR as quoted currency:

• You hold 2 BTC at €45,000 each = €90,000
• You hold 10 ETH at €2,500 each = €25,000
• You hold €5,000 in cash
• Total portfolio value: €120,000

Performance Comparison

When comparing trading bots, the quoted currency matters:

These returns are not directly comparable without currency conversion. A 15% return in EUR might be better than 18% in USD if EUR appreciated against USD during that period.

Portfolio Composition: Allocated, Unallocated, and Unfilled

Understanding how your portfolio is structured helps you grasp how the quoted currency affects your trading bot's operations.

Allocated vs. Unallocated Funds

How This Works in Practice

Consider a trading bot with EUR as its quoted currency and a €100,000 portfolio:

┌─────────────────────────────────────────┐
│         Total Portfolio: €100,000       │
├─────────────────────────────────────────┤
│  Allocated (80%)        │ Unallocated   │
│  ┌─────────────────────┐│ (20%)         │
│  │ BTC: €50,000        ││               │
│  │ ETH: €30,000        ││ EUR: €20,000  │
│  └─────────────────────┘│               │
└─────────────────────────────────────────┘

• Allocated (€80,000): Currently invested in crypto assets
• Unallocated (€20,000): Held in EUR, available for new trades

Unfilled Orders

Unfilled orders represent pending trades that haven't been executed yet:

Example:

• You have €20,000 unallocated
• You place a buy order for €15,000 worth of BTC
• Until filled: €15,000 is reserved (unfilled), €5,000 is truly available
• After filled: €15,000 moves to allocated (now in BTC), €5,000 remains unallocated

The Relationship Between Quoted Currency and Allocation

The quoted currency is always what your unallocated funds are held in:

$$\text{Unallocated Balance} = \text{Cash in Quoted Currency}$$

When the bot buys assets:

• Unallocated (quoted currency) → Allocated (base currency assets)

When the bot sells assets:

• Allocated (base currency assets) → Unallocated (quoted currency)

Multiple Quoted Currencies

Some advanced trading bots support multiple quoted currencies, allowing you to:

Trade on Different Exchanges

Benefits of Multiple Quoted Currencies

1. Exchange Flexibility: Use the same bot across different exchanges with different currency offerings
2. Regional Preferences: European users might prefer EUR, US users might prefer USD
3. Reduced Conversion Fees: Avoid converting your local currency to trade
4. Risk Distribution: Diversify across currency exposures

Considerations When Choosing

How Quoted Currency Affects Performance Metrics

All key metrics are calculated in the quoted currency:

Total Value

$$\text{Total Value} = \text{Allocated Value} + \text{Unallocated Balance}$$

Growth

$$\text{Growth} = \text{Current Total Value} - \text{Starting Total Value}$$

Growth Percentage

$$\text{Growth \%} = \frac{\text{Current Value} - \text{Starting Value}}{\text{Starting Value}} \times 100$$

Example Scenario

Starting portfolio (EUR quoted currency):

• Allocated: 1 BTC @ €40,000 = €40,000
• Unallocated: €10,000
• Total: €50,000

One month later:

• Allocated: 1 BTC @ €48,000 = €48,000
• Unallocated: €12,000 (from a completed trade)
• Total: €60,000

Growth: €10,000 (20%)

Practical Implications

When Connecting Your Broker

1. Check Available Pairs: Ensure your exchange offers trading pairs with your preferred quoted currency
2. Verify Liquidity: Some quoted currencies have lower trading volume
3. Consider Fees: Conversion fees may apply if your deposit currency differs

When Evaluating Bot Performance

1. Same Currency Comparison: Only compare bots with the same quoted currency directly
2. Currency-Adjusted Returns: For different quoted currencies, convert to a common currency first
3. Time Period Matters: Currency values fluctuate; consider the measurement period

When Managing Your Portfolio

1. Rebalancing: Unallocated funds in the quoted currency are used for new positions
2. Withdrawals: Withdrawing means converting allocated assets back to the quoted currency
3. Deposits: New deposits should be in or converted to the quoted currency

Common Quoted Currencies

Stablecoins

Fiat Currencies

Cryptocurrencies

FAQs

Can I change the quoted currency after setting up my bot?

Typically, changing the quoted currency requires reconfiguring the bot and potentially liquidating positions. It's best to choose your preferred quoted currency before starting.

What happens to unallocated funds when the quoted currency's value changes?

If you hold EUR as your quoted currency and EUR strengthens against other currencies, your purchasing power for non-EUR assets increases. The EUR amount stays the same, but what you can buy with it changes.

Should I choose a stablecoin or fiat as my quoted currency?

• Stablecoins (USDT, USDC): Widely available on crypto exchanges, 24/7 trading, but carry smart contract and counterparty risks
• Fiat (EUR, USD): More regulated, but may have limited trading hours and higher fees

How do unfilled orders affect my available balance?

Unfilled orders reserve funds from your unallocated balance. Until the order is filled or cancelled, those funds aren't available for other trades.

Related Topics

• Trading Symbols: Understanding base and quoted currencies in trading pairs
• Portfolio Composition: How your assets are distributed
• Growth Metrics: How returns are calculated in your quoted currency
• Positions: Understanding your allocated funds

Summary

The quoted currency is the foundation of how your trading bot measures everything—from portfolio value to performance metrics. Understanding the relationship between allocated funds (invested in assets), unallocated funds (cash in quoted currency), and unfilled orders helps you better interpret your bot's behavior and make informed decisions about which quoted currency to use. When choosing a trading bot, always verify which quoted currencies it supports and ensure they align with your preferred exchanges and currency preferences.