How currency pairs work

You never trade one currency alone — you always trade a pair. EUR/USD means you're comparing the Euro to the US Dollar.

The first currency listed (EUR) is called the base. The second (USD) is called the quote. The price tells you how much of the quote currency it takes to buy one unit of the base.

So if EUR/USD is 1.0850, it means 1 Euro = 1.0850 US Dollars. If you think the Euro is about to get stronger against the Dollar, you'd buy this pair. If you think it's about to weaken, you'd sell it.

It helps to think of a currency pair as a live scoreboard between two economies. When you see EUR/USD ticking up, that's the market saying "right now, more people want Euros relative to Dollars than a moment ago" — not that the Euro is "good" or the Dollar is "bad," just that the balance shifted.

Every pair also has a spread — a tiny difference between the price you'd buy at and the price you'd sell at, which is how most brokers make their money. On EUR/USD that spread is usually razor thin because so many people trade it; on less common pairs it can be wider, which matters when you're calculating whether a trade is even worth taking.