the base currency

the base currency

USD / CHF
In this example the USD is the base currency and thus "basis" for buying / selling.

If you think the Swiss franc is overvalued, it will be done shopping USD / CHF order. With that you have bought U.S. dollars in the expectation that they will appreciate versus the Swiss franc.

If you think that the U.S. housing market bubble burst will hurt future economic growth, which will weaken the dollar, will be carried Sales USD / CHF order. With that you have sold U.S. dollars in the expectation that they will depreciate against the Swiss franc.

I do not have enough money to buy 10.000 €. Can I still trade?
You can with margin trading! Margin trading is only a term used for trading with borrowed capital. This is how you're able to open $ 10,000 or $ 100,000 positions with as little as $ 50 or $ 1,000. You can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital.

Margin trading in the foreign exchange market is quantified in "lots". We will discuss these in depth in our next lesson. For now, just think of the term "many" as the minimum amount of money must be purchased. When you go to the grocery store and want to buy eggs, do not just buy a single egg, they come in dozens or "lots" of 12. In exchange, it will be just as foolish to buy or sell 1 €, so they usually come in "many" of 10,000 (mini) or 100000 (default) depending on the type of account you have.