Short - Long positions-confused newbie

[jaswhite16]

I am obviously new and confused. I do understand the concepts
of short and long position when related to base and quote prices
for currency.
Would you please explain this.
To start how can I sell short for lets say ( usd/euros) if I have
not purchased euros before I attempt to sell short. I cant sell what'
I don't own. I can see you have the currency(borrowed) sell at the
prevailing price then the price decreases you buy give back the money
and keep the difference but you can't sell what you don't own.

Also, being long in a position, what is this? Does it mean I have purchased
a lot of this currency and have it stacked up on hand? Explain please.
Also, please explain the flip side being short.
thanks

[fx-tiger]

Hi,

*When you initiate a long position on the EUR/USD (let's say 1 standard 100K lot), this is what happens:
-You buy 100K Euros for 130K USD (if EUR/USD trades at 1.3000).
-When you close your position (for example after EUR/USD rose to 1.4000), you sell back the 100K Euros for 140K USD and you make a 10K USD profit (=1000 pips) because you bought them at only 130K USD.

*When you initiate a short position on the EUR/USD (let's say 1 standard 100K lot), this is what happens:
-You lend 100K Euro's from your broker.
-You sell these 100K Euro's for let's say 130K USD (if EUR/USD trades at 1.3000).
-When you close your position (for example after EUR/USD fell to 1.2000), you buy back the 100K Euro's you bought at 130K USD for only 120K USD.
-The 100K Euro's you just bought back are returned to your broker and you make a 10K USD profit (=1000 pips) because you sold 100K Euro's for 130K USD and then bought them back for only 120K USD.

Hope this helps,
FX-Tiger

[rhodytrader]

FX-Tiger has stated it pretty clearly. I would just add that when you go long EUR/USD you are in fact borrowing the 130k USD to convert in to EUR, just as you borrow the 100k EUR in the short example. In all forex trade you are always borrowing the short currency and converting it in to the one you are going long in.

[jaswhite16]

thanks , that has cleared the fog for me

j white