Example of an FX Trade Currency Pairs Leverage* Margin Trading Costs
Currency Pairs
What is the significance of currency pairs?
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A currency pair represents the exchange rate between the two currencies. For example, the rate at which the EUR/USD is trading represents the number of US Dollars one Euro can purchase. The first currency is called the base currency and the second currency is called the counter currency.

An example of how currency pairs trade is if a trader believes the Bank of Japan will intervene to cause a decrease in the Yen against the US Dollar, then the trader would buy USD/JPY (buy the US Dollar/sell the Yen). However, if the trader believes that Japanese investors are losing faith in the United States' economy and are pulling money out of the US into Japan, then the trader would sell USD/JPY (sell the US Dollar/buy the Yen).

This is an example of how currency pairs are listed on trading stations.

The currency pairs are listed on the left side of the column. The sell price is the level at which a trader can sell the currency pair and the buy price is the level at which a trader can buy the currency pair.
 
* Without proper risk management, a high degree of leverage can lead to large losses as well as gains.