Forex - (short for Foreign Exchange) is real-time buying of one currency and selling of another. One of the biggest trading markets in the world, trading foreign currency allows people to trade one currency for another trying to determine which currency's value will increase by the end of a determined time. For example, one could choose to buy the US Dollar against the Euro in anticipation for a rate change in favor of the US Dollar. The foreign currency trading market is considered the largest financial market in the world with average daily trading rates currently amassing to over three trillion US Dollars.
To start with, remember that the first currency listed is called the "base currency." A base currency is usually the US dollar. People (traders) will usually pit the USD against another currency – say, for example, a Japanese Yen.
The American dollar is usually considered the base currency for quotes. For example, a quote of USD/JPY 2.34 means that one U.S. dollar is equal to 2.34 Japanese Yen.
When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has increased in value and the other currency has weakened. If, after the allotted time, the USD/JPY quote is 2.50, then the dollar is stronger because it can buy more Japanese Yen. There are exceptions to the rule, such as the British pound (GBP) or Euro, which would be the base currency if matched against the US Dollar. In this case the American currency is the "weaker" one.
To sum up: if a currency quote goes higher, this increases the value of the base currency. A lower quote means the base currency is weakening.
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