When a strip of metal (M) is brought in contact with the solution containing its own ions (Mn+), then either of the following three possible processes can take place:
    
The metal ion Mn+ may collide with the metallic strip and bounce back without any change.
    
The metal ion Mn+ may collide with the strip, gain n electrons and get converted into metal atom, i.e. the ion is reduced.
                                                          
Mn⁺ + ne-    M
    
The metal atom on the strip may lose n electrons and enter the solution as Mn⁺ ion, i.e. metal is oxidized.
                                                                      
M     Mn⁺ + ne^-

Now, if the metal has a relatively high tendency to get oxidized, its atoms would start losing electrons change into positive ions and pass into the solution. The electrons lost, accumulate in the metal strip and cause it to develop negative charge. The negative charge developed on the strip does not allow metal atoms to continue losing electrons but it would reattract the metal ions from the solution in an attempt to neutralize its charge. Ultimately, a state of equilibrium will be established between the metal and its ions at the interface.
                                                     
 

Similarly, if the metal ions have relatively greater tendency to get reduced, they will accept electrons at the strip from the metal atoms and consequently, a net positive charge is developed on the metal strip. Ultimately, a similar equilibrium is established between the metal ions and the metal atoms at the interface.
                          
 

In either case, the separation of charges at the equilibrium state results in the electrical potential difference between the metal and the solution of its ions and is known as electrode potential.

The exact potential difference at the equilibrium depends on the nature of the metal, its ions, the concentration of ions and the temperature.

According to the present IUPAC conventions half reactions are always written as reduction half reactions and their potentials. It may be noted that:
    
Reduction potential (tendency to gain electrons) and oxidization potential (tendency to lose electrons) of an electrode are numerically equal but have opposite signs.
    
Reduction potential increases with the increase in the concentration of ions and decreases with the decrease in the concentration of the ions in solution.
    
The reduction potential of electrode when the concentration of the ions in solution is 1 mol L^-1 and temperature 298 K is called standard reduction potential (  ) or simply standard electrode potential (  ).
    
The absolute value   cannot be determined because once equilibrium is reached between the electrode and the solution in a half cell, no further displacement of charges can occur unless and until it is connected to another half cell with different electrode potential. This difficulty is overcome by finding the electrode potentials of various electrode relative to some reference electrode whose electrode potential is arbitrarily fixed. The common reference electrode used for this purpose is standard hydrogen electrode (SHE) whose electrode potential is arbitrarily taken to be zero.