The Forex market gives a number of trading opportunities and this is why it has risen in popularity among the traders. However, there are some, who are still confused about how the Forex market works and what the currency pairs denote.
These problems get solved if you break down the quote. A Forex trading quote is different from the other assets because the currencies cannot trade alone. The currency is priced in terms of the counter currency. This is why Forex is traded in pairs and you need to understand what pairing is to be able to trade in the Forex market.
The base currency and the counter currency
In the Forex market when you take a trade you will see that every quote has two currencies. Like for example, you will see a EUR/USD. This is the value of the Euro relative to that of the US dollar. You will never see something like EUR or USD as a standalone currency when you trade in the Forex market.
The first currency in the quote is the base currency. The second currency in the Forex quote is the counter currency. The base currency in all cases is 1 and the value of the counter currency is the amount of money that you will have to pay to buy a single unit of the base currency. Like for example, assume that the EUR/USD is trading at 1.2 then this means that you need $1.20 to buy 1 euro.
Valuations in the Forex market
When you go to value the company in the stock market then this is very easy. Like for example if a company is trading at $50 then this means that to buy a single share of the company you need to pay $50. However, when trading in currencies you need to exchange one currency for the other and thus you will have to value both the currencies in the pair in relation to each other.
The first currency quoted is the base currency. Thus when the price of the currency pair is increasing then this means that the base currency is gaining in value. When the price starts to decline then this means that the counter currency is gaining in value.
Currency pairs have to be understood if you wish to trade in the Forex market on Bitcoin Trader. However, you can analyze the charts in the same way as you see the stocks charts if you are trading using technical analysis. The support and resistance levels and the multiple time frame analysis that needs to be done will be done in exactly the same way as you do technical analysis for any other asset.