1. Trading in Forex means trading in currency pairs and takes place by exchanging one element of the pair for another. For this reason, currencies are quoted in pairs. For example, the pair of U.S. Dollar and Japanese Yen can be quoted as USD/JPY equals 105.53, which means that 1 USD can buy 105.53 JPY.
2. The first currency listed in a currency pair is called the base currency. The base currency is usually the U.S. Dollar. Traders generally trade the U.S. Dollar against another currency, which is called the counter currency.
3. When the quote increases, it implies that the base currency has risen in value and the counter currency has weakened in value. For example, if the USD/JPY quote used to be equal to 100.33 but is now equal to 105.53, then this means that the dollar has strengthened because 1 USD can now buy 105.53 JPY as opposed to the mere 100.33 JPY it could buy beforehand.
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