#TradingPairs101

What does trading "currency pairs" mean?

Trading currency pairs - or foreign exchange trading - revolves around buying and selling currencies in pairs. To buy and sell currencies, you need to get information about how valuable the currencies in the pair are relative to each other. This relationship determines what the best currency pair is to trade. A currency pair quotes the currency abbreviations, followed by the value of the base currency against the secondary currency.

There is always an international code that defines the setup of currency pairs. For example, if the EUR/USD exchange rate is 1.23, it means that the euro is equal to 1.23 dollars. Here, the base currency is the euro (EUR), and the counter currency is the US dollar.