that means it cost me 1.2000 dollars to exchange for 1 Euro.
if i press buy. Then it means that Euro is +1 and usd is -1.2
if i press sell. Then it means that Euro is -1 and usd is +1.2
now, if it would stand bid/ask instead of buy/sell.
would that mean that if i press bid Euro is -1 and usd is +1.2
and when i press ask Euro is +1 and usd is -1.2.
question 1: if someone tells me to bid euro/usd, does that mean that i should press sell?
questions 2: why is the pairs quoted in sell/buy instead of buy/sell?
“The bid is the price at which your broker is willing to buy the base currency in exchange for the quote currency. This means the bid is the best available price at which you (the trader) will sell to the market.”
is the broker buying FROM me Euro and selling me USD, so i go Euro -1 and usd +1.2.
or is the broker buying FOR me so that i go Euro +1 and usd -1.2
I think at this stage of the learning process you should just accept it for what it is - it wont change and what you are describing is a industry standard layout when illustrating the sell and buy quote in that order.
Also, at this stage of the learning process it will help you to fully understand the following:
As a retail trader what you are actually doing is speculating, you are a retail speculator when using a retail broker. When you hit buy or sell you are not buying or selling anything, you are placing a bet with your broker that price will go either up or down. There is no transaction here which involves you buying one currency whilst simultaneously selling another; such as your EUR.USD example.
In fact, your ‘trade’ which you place, which we can now call a speculative bet will NEVER reach the underlying market. It is dealt with in house by your retail broker. Don’t let anyone tell you otherwise. The only time a retail broker will pass trades onto the underlying ‘real’ market is when they have a Net long or short exposure. For example, the retail broker will net off their customer trades against one another, the left over exposure is then passed into the market to protect the retail broker from risk. A retail broker is always aiming to be risk neutral - at least that is their business plan.
It’s normal to see the phrases ‘Sell and Buy’ on retail broker platforms, as displayed in the above image also. This really is inaccurate terminology - but terminology that the retail market is used to and so it has become expected.
You will note that I have referred to Retail Brokers, I should imagine this is what 95% of retail traders use, so the above applies for these account holders. However, should you be using a Commercial Brokerage Platform [these are expensive and used by institutional/high net worth retail traders] then you are actually dealing into the underlying market. This is the only time where the transaction takes place whereby you buy one currency and sell another - this is when you are participating in the market and become a market player.
Many many many retail brokers provide accounts where they fabricate environments to mirror Commercial Brokerage Platforms, so have a think about this. The bottom line though is that you should not worry about the mathematics of what actually happens when you click ‘Buy’ or ‘Sell’ - because you will not be buying or selling anything.
There is also nothing wrong with retail brokers operating in this way, it opens the FX markets (and other markets) to a retail industry which previously would have not been able to speculate on such price movements.
Both questions are answered in the above post - read it a few times and you will realise that the questions you are asking are not relevant to retail trading.
There are plenty of unnecessary examples online of the transactions that don’t ever take place on a retail broker account. Have a little search perhaps. Personally, im not a supporter of answering questions on fabricated ideas. Sorry.
