The main difference between trading in the foreign exchange market and trading in all other financial markets is the difference between solitary valuation versus relative valuation. Solitary valuation is common sense for most people and is the way that most investors understand stock prices and other financial markets, but relative valuation is a little bit more tricky and it is what can make forex trading more complicated in some ways than stock or traditional commodity trading. When you look at a stock market quote you will usually see the stock value quoted in a dollar amount, and this of course is the normal way that we value things in finance. However, valuing a currency is a different process, because you cannot value the US dollar in terms of dollars so it then becomes important to value one currency in terms of another currency. It is for this reason that all foreign exchange transactions take place with currency pairs, and this is called relative valuation where one currency's value is listed relative to another currency.
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