When you trade two currencies they are always displayed as a pair e.g. EURUSD (euro and US dollar). The left hand currency – in this case the euro – is the ‘base currency’. The right hand currency – in this case the US dollar – is the ‘counter currency’.
The relative value of the two currencies will continually change. If you think that the base currency – euro – is going to gain against the counter currency – US dollar – you would buy the pair. If you thought that the reverse would happen and the dollar would gain against the euro, you would sell the pair. Traders use a combination of technical and fundamental analysis to try and predict changes to currency values. They can also apply stop loss and take profit to any open position.