As every decent poker player will tell you, if you’ve got a pair of jacks, bet ’em. This is something to keep in mind when entering into the Forex trading market. The Foreign Exchange (Forex) works in pairs. You are basically trading one currency for another. Pairs can be mixed and matched against each other, but it’s always in pairs.
The more time you spend researching the Forex market the more familiar you’ll become with all the symbols and phrases. Spending time at UFX Markets is a perfect way to immerse yourself into foreign trading. The first thing you’ll notice is that every currency rate is judged against the U.S. dollar. For instance, if you look at the rate of the Japanese yen (JPY) and the U.S. dollar (USD) as a trading pair, you might see that the yen is rated as 103.14. This makes the USD the base currency.
The base currency is what the corresponding paired currency is judged against. The base currency is always quoted first so if you see USD/JPY you know what the base is. The British pound sterling (GBP) and the European Union euro (EUR) where the GBP is the base currency produces a chart like this: GBP/EUR.
As an example, if the yen starts out at that 103.14 rate in the morning but then is quoted to trade at a higher rate later on in the day this means that is now takes more yen to buy U.S. dollars. If you’re holding onto yen and think the USD is going to go up, you would want to sell your yen