# How Does Forex Trading Work? A Beginner’s Guide to the Currency Market

> Discover how Forex trading works, from currency pairs to market mechanics. Learn the fundamentals of the Forex market with XBTFX’s expert insights and start trading smarter.

**Published:** 2023-02-15  
**Category:** Education  
**Author:** XBTFX Editorial  
**Canonical:** https://xbtfx.com/blog/how-does-forex-trading-work/

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Forex trading is the **simultaneous act of buying one currency while selling another.**

The combination of these two currencies make up what's known as a **currency pair.**Currencies are always traded in pairs, and each currency in a pair is represented by a unique three-letter code.

The first two letters in the code represent the country, and the third letter identifies the currency, such as the code JPY = Japanese Yen.

Forex prices are known as **rates**, and they express the **value of one currency in terms of the other.**

For example, a price or rate in euro-dollar could be quoted as:

**EUR/USD = 1.23700**

The currency to the left of the slash is the**base currency** (in this example, the euro), and the currency on the right-hand side is the **quote currency** (in this example, the US dollar).

For traders using our free MetaTrader platform, currency currency pairs are displayed on MT4 and MT5 without the slash (/) so you'll see pairs communicated as EURUSD rather than EUR/USD.

Looking at this currency notation above, we can see that 1 unit of the base currency (1 euro) is equal to 1.23700 US dollars, which means**to buy 1 euro, you’ll have to pay 1.23700 US dollars.**

If you’re selling, the FX rate specifies how many units of the **quote currency you get in exchange for one unit of the base currency.** In the example above, the rate tells us that **you'll receive 1.23700 US dollars when you sell 1 euro.**

## When should I buy?

A trader will open a **buy** or **long position** if they believe that the value of a specific base currency will **increase.**

## When can currencies be traded?

The forex market is unique among the world’s financial markets in that it's open for trading 24 hours a day, 5 days a week.