Forex trading is essentially the buying of one currency and the simultaneous selling of another. Therefore when trading currencies we will always see them quoted in pairs.
When placing a trade we are speculating on which currency we believe will become stronger or weaker against the other with the goal of making a profit from the exchange rate movement.
The currency to the left is called the base currency. The currency to the right is called the quote the currency. The quote currency tells us how much it is worth against 1 unit of the base currency. So if we say the EURUSD is trading at 1.3000 it means 1 euro equals $1.30.
The base currency is the basis for the buy or the sell trade. If we believe that the Euro will strengthen against the dollar we would buy the EURUSD pair. This means we are buying the base currency – the EURO, and simultaneously selling the quote currency – the US DOLLAR.
If we believe the EURO will weaken against the US Dollar we will sell the pair i.e. we are selling EURO and simultaneously buying US DOLLARS.
When we are buying the base currency, in traders jargon we call this going long (looking to profit from the pair rising), and when we are selling the base currency we call this going short (looking to profit from the currency pair falling).