Forex transactions involve two currencies. One currency is purchased while the other is sold. Consider the EUR/USD currency pair. If you bought this pair you would be buying euros and selling dollars. If you sold this pair you would be selling euros and buying dollars. As more traders buy the EUR/USD pair the value of the euro strengthens relative to the dollar and the exchange rates increases. Likewise when more traders sell the EUR/USD the value of the euro weakens relative to the dollar and the exchange rate decreases. For more videos, visit FXCM's YouTube channel: http://www.youtube.com/forexcapitalmarkets Currency trading may result in a loss in excess of your deposited funds.
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