A small voltage develops in response to a difference of temperature between a thermocouple's two junctions. This voltage between dissimilar metals, called the "Seebeck effect," is a characteristic of the metals and has a magnitude directly proportional to the temperature difference. A thermocouple-based instrument translates these voltages into actual temperatures.
The thermocouple junction in contact with a medium or object whose temperature is to be measured is called the hot junction. The hot junction corresponds to the probe tip. The probe itself is connected to the instrument.
The cold junction, or reference junction, is the one that connects the thermocouple to the instrument. The instrument itself measures the cold junction temperature and adds it to the temperature differences computed from the thermocouple voltages. This "cold junction compensation" allows a thermocouple-based instrument to convert temperature differences to actual temperatures.