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Basic question about Pairs Basic question about Pairs
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Old 02-25-2009, 11:19 AM
Rafael's Avatar
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Default Basic question about Pairs
Hi.

I understand that if for example i have the EUR/USD pair and i want to go long than it means i sell the USD and buy EUR - no problem.

If i have USD/JPY and i want to go long than it means selling JPY and buying USD. How can it be? i don't have any JPY to sell in order to buy USD. I have only USD in my account so how exactly is my order executed?

I will be glad if anyone can clarify.
Thanks
Rafael
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Old 02-25-2009, 12:11 PM
 

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how it works is you buy the yen with the dollors in your account and the sell them to buy the yen/pair.

hope this helps
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Old 02-25-2009, 02:29 PM
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Hi
So you mean i sell usd to buy jpy and then sell the jpy to buy the usd again?
Sounds strange but maybe i still don't understand some basic concepts or complicates the matter unnecessarily.
I wonder if the way to understand it is to think in actual pair price instead of breaking it to it's components.
Thanks
Rafael
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Old 02-25-2009, 07:42 PM
IDR IDR is offline
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You're thinking within a day-to-day banking operations parameter, where if you opened up an account in USD, then you only have USD. In forex trading, the USD account is just to simplified broker's accounting.

If you open, say, USD 1,000 in a broker, you are considered as having an account in every currency that broker offered, in amount equal to USD 1,000. So, it is easy for you to sell JPY first since you're considered as having Yen in amount of equal to USD 1,000.
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Old 02-27-2009, 06:07 AM
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For the present scenario, with which Currency pair Should I go for..?
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