I feel extremely stupid b/c I have asked this question at Forexfactory and got the answer but I cant visualize the concept. I just dont get it. I understand buying low and selling high but I cant understand this shorting thing. Can someone please explain this slowly and use every effort to "idiot proof" it for me.
breifly I'd say that by shorting, you just sell a currency, at lets say 1.000 and when its price goes down, say 0.980, you buy it again (by closing the position). what happens is exactly like when going long. you bought low and sold high, just in the reverse direction.
if you have problems understanding how comes you sell a currency you never possesed in first place - this is what forex is about... you work with money which is not yours (leveraged money)... I hope this information is accurate. this is how I explain it to myself though