I’ve read a few times how it’s possible to make money when prices are falling, this doesn’t make sense to me, because if you buy and then sell when the price has fallen - how can you make money ? am I missing something here ?
thank you
Yeah, with you on that one, ive read it a few times but feel its maybe my interpretation of the saying. Perhaps people talk about the small bounces in a declining currency, and scalping these??
Shorting a security is how. Took me a while to understand it to. Basically you are buying into a security with the expectation that it will go down. So you get in high and then when it falls to what ever price you had hoped for. You get out and you get the difference between what you got into it at and what it fell to. However, if it doesn’t go down and goes up from where you bought in. You will owe that difference.
Sell first, then buy back later at a lower price. Keep the difference.
Get your mind off of having something to actually buy.
There is no product here. Only the difference in exchange value from the time you opened to the time you close…
Since these are in pairs, the easiest way to think of it is if you “buy” a trade in the E/U, you have bought the euro against the dollar. Therefore, if the euro climbs, or the dollar drops after you entered the trade, you gain the difference between the two.
If you “sell”, you buy the dollar against the euro. So if the dollar climbs, or the euro drops, you gain the difference.
In summary, the EUR/USD trades would be:
If you “buy”, you are long euro.
If you “sell”, you are long dollar.
Hope that helps:)
Just think of it as if you’ve been offered a good deal on a telly, for say £300, so you go and find someone to sell it to, you find someone that will buy that telly for £400, so you get the £400 and pay out £300 and you get to keep the £100.
Same with Forex except you don’t know what the future price will be - well that’s what you got to try and work out.
u can’t sell what you don’t have. a classic.
Ah, thought my interepretation was quiffy, so in a falling market, there will always be a “rising” currency as they come in pairs, hence you can make money off a declining market.
Of course you can, that’s what I’ve just said, you don’t have to have what you want to sell in your hand, all you have to do is make sure you can supply it.
Yes, I suppose that is true, but hey don’t think about it, if is going up - buy then sell, if it’s going down sell then buy, that’s it.
‘you get in high - and if the price falls, you get the difference’ ??
I’m just not getting this sorry :o
surely if you get in high and the price falls you ‘lose’
I must be really stupid - can’t understand at all.
How can I put it:-
Sell at £1.50 then Buy at £1.20 =£0.30 profit
Buy at £1.20 then Sell at £1.50 = £0.30 profit
Nothing more to it.
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right … you [I]SELL[/I] first then when the price is high, then re-buy when the price has dropped ? is that it ? I can understand that - it’s the wording that confused me - when someone says ‘get in’ when the price is high, they actually mean sell ? i.e. ‘get out’ ? and then buy back ?? is that right ? have I finally got it right ?
My bad catwomen, I just said it wrong. Purple’s got it right. Again, I over simplified.
Perfect…
oh thank goodness for that - it’s been driving me mad :eek:
now I can sleep at night
thanks all
don’t worry, we all get there in the end.
In order to make money on the difference between currency values when a particular pair’s price is falling, you must short (or sell) on currency in favor of the other. The way the market is set up, if you sell you are essentially borrowing at a certain price and buying at a lower price which closes your sell order. There is an excellent article on this subject here:
Short Side Basics & Price-Volume Rules
Good luck!
I think I may be a little late for the epiphany, but all that needed to be said was that you don’t have to buy first. You can buy or sell at anytime.
Thanks catwoman for asking this question, I was able also to better understand this by reading through this thread. My thick scull is getting in the way when it comes to understanding the long/short of it. I really was stumbled when I thinking of selling on a currency pair because in my mind I needed something to sell first. Of course these are the newbie steps we have to take in the beginning. I hope you success.
Lol I thought it’s like this ex. eur/usd becomes usd/eur when I sell.