How the heck can I sell something I didn't buy?

Beginner Questions
1

I admit I’m not out of kindergarten yet, but this is really driving me nuts.

I understand that…

USD/EUR

I can buy the USD because it’s on the left side and I’m expecting it to go long or raise in price. But now I"m reading something that says I can choose to sell the right EUR side (without buying the left USD side?) Um, this defies common sense.

I did a teeny weeny little bit of day trading several years ago, and this pair trading is making my poor brain run in circles.

I can’t be this stupid. Someone please help.:frowning:

2

Please go learn the very basics of FX trading.

There is no left side, right side.
It is just the created pair for trading in the FX market.
As there are other currency pairs.

It is EUR vs USD pairing.

In this EUR/USD pairing; currency pair tells you how many U.S. dollars
(the quote currency) are needed to purchase one Euro (the base currency).

First pair is the base currency and the latter is the quote currency.

And FX trading has nothing to do with common sense.

3

Its not sell its short. Well I bet i can sell your kidney and I dont own it.

4

You are making a promise to deliver in the future
You want to buy a fridge from me at 500$ and take delivery in 2 weeks. I can sell that fridge even if I dont have it as long as I can deliver on the due date. If the prices of fridges in the meantime go down before I have to buy it to deliver to you I can make a good profit, if they go up I will make a loss. Get it?
In addition in FX you do not have to deliver. You effectively buy the contract back. Short selling in shares is based on the same premise. Final thing to consider is that in a currency pair which is incidentally quoted as EURUSD not the other way round, buying the EUR is effectively the same as selling the USD

5

consider the pair XXX/YYY:

if you want to buy this pair, you buy XXX and sell YYY.
if you want to sell this pair, you buy YYY and sell XXX.

6

This one is not right either.
Use the original example of
EUR/USD. You don’t buy this
pair by buying EUR and you
certainly aren’t selling this
pair by buying USD.

7

Then what are you doing? Please explain if you are going to make such a cryptic post.

8

gracetrader, listen to Tony he is explaining to you in a clear way. also ecn scalper has a point you should go through school and learn the basics.

Its like a futures contract. When you “sell” or “buy” there is no real expectation that you will receive any goods. Its more like a game if you will. You are agreeing to buy or sell at a price and if it goes in your favor then you made a profit if not you lost money. The thing is this “game” is not a game and I can assure you, you will lose money if you don’t put alot of time into understanding this stuff.

If you bought crude oil you wouldnt expect a truck to show up and deliver it, you would buy it and if you are fortunate enought for oil to become more expensive then you could sell it and keep the difference in money. Think of it as virtual oil. You own it even for a minute then you sell it.

I know its confusing but just go through the school like ecn says and things will become more clear.
thanks. john

9

“[B]Foreign exchange traders don’t typically own an asset. Rather, they make a bet that the price of one currency will strengthen or weaken in relation to another.”[/B]

I think that is a good quote to simplify what has already been said.