The foreign exchange (Forex) market is the global decentralized marketplace for currencies. It is the world’s largest and most liquid market, with an average traded value of $1.9 trillion every day.
Note: Forex is an unregulated market, therefore Limit orders may be executed at up to the limit price regardless of the Level1 market price. The SEC has prepared an Investor Bulletin with information on off-exchange Forex markets that provides additional details. Remember to always exercise caution when trading.
Currency pairs are the quotation and pricing structure for trading in the Forex market. The value of one currency is always determined by comparing it to another currency.
base currency = first currency of a pair
quote currency = second currency of a pair
For example, when trading the currency pair EUR/USD, EUR is the base currency, and USD is the quote currency. The base currency is the currency that is being bought. The quotes represent how much of the quote currency is needed to purchase a unit of the base currency. If EUR/USD is quoting at 1.25, and you buy the pair, that means that you are using 1.25 USD to purchase 1 EUR. If you sell the pair, then you would be selling 1 EUR to receive 1.25 USD.
For more information, see Investopedia's Currency Pair Definition page.