Question from a newbie

Beginner Questions
1

Hi All,
Im completely no knowledge about FX trading and now I am studying here on babypips.com.
I just have one question which I dont understand and I hope you can help me.

In the example"

  • You believe that signals in the market are indicating that the British Pound will go up against the US dollar.
    • You open one lot (100,000), buying with the British pound at 1% margin and wait for the exchange rate to climb. When you buy one lot (100,000) of GBP/USD at a price of 1.5000, you are buying 100,000 pounds, which is worth US$150,000 (100,000 units of GBP * 1.50 (exchange rate with USD)). If the margin requirement was 1%, then US$1500 would be set aside in your account to open up the trade (US$150,000 * 1%). You now control 100,000 pounds with US$1500. Your predictions come true and you decide to sell.
    • You close the position at 1.5050. You earn 50 pips or about $500. (A pip is the smallest price movement available in a currency)."

On the bolded part I dont understand why I need to sell after I buy. Isnt it that when I think GBP will rise against USD, what I do is to hit “BUY” and when it reach a my target I have to close my order? Why on the example it says I have to sell? What I would sell?

Again it says"

You buy 100,000 pounds at the GBP/USD exchange rate of 1.5000. You blink for two seconds and the GBP/USD exchange rate rises to 1.5050 and you sell.You have earned a profit of $500.

I bought GBP, how do I sell what I just bought after I close my position? Do I need to buy first and then after reach the target, I have to sell again? :confused::confused:

Please help me understand this part. Thanks!

2

To sell what you have previously bought is a full round-turn trade. Closing a trade is synonymous with doing the exact opposite of what you initially did. In other words, if you first bought, closing a trade means you’re selling it back. If you first sold, closing a trade means you’re buying it back.