Net position of doing that is Profit on one, loss on the other - exactly the same amount - but it costs you two lots of spread - = loss overall !
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This is taken from babypips. I don’t get it by buying one currency and selling another?
Please explain to me.
Example i have a 1 GBP to 1.5590 USD
i would sell GBP because it is weaken and buy USD? am i right?
it simply means it’s a simultaneous transaction
but this is where @_bob will chew my head off for saying if you buy one you are selling the other 
so ok, i’ll say it like this then
-
it’s a simultaneous transaction (from a Certain Point of view)
-
Now in saying that… yes THERE IS NO PHYSICAL TRANSACTION, You don’t actually own anything.
it’s a CFD (contract for Difference) so it is a SIMULTANEOUS THINGY… (let’s call it )
and you are speculating on the difference of the two THINGS in the currency pair or… the difference in value between the 2
or to be even more accurate
the difference between the SECOND ITEM … RELATIVE to the First item
but when babypips says it like this, it’s just an easier way to comprehend it
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It’s confusing to me bro. haha
@Sureshhey
that’s cool… I understand
Ok . let’s do it like this shall we
You have a banana i have an apple ok
You agree to sell me your banana… so i’m buying it… right
and i agree to sell you my apple… so you’re buying it
SEE HOW THAT GETS CONFUSING
well to get through that… JUST CONCENTRATE ON ONE SIDE ONLY
so… YOUR SIDE
YOU ARE BUYING APPLES AND SELLING BANANA’S ok simple
now me and you do business, for example
we trade in Fruit and yes it’s physical fruit
THE MOMENT YOU GIVE ME A BANANA , I GIVE YOU AN APPLE IN RETURN
so this is the concept of THE TRANSACTION HAPPENS INSTANTLY
now let’s say we own fruit shops and you only sell banana’s and i only sell apples
and then someone’s puts our business up for trading. both of them and WE ARE PEGGED AGAINST EACH OTHER
so let’s say there are these PAIRS or INSTRUMENT PAIRS
BAN/USD - banana/USD
APP/USD - Apple/ USD
BAN/APP - Banana / Apple
so BAN/USD is the price of your banana vs the USD
and of course APP/USD is the price of my apple vs the USD
OK, WHAT’S HAPPENING NOW IS THIS
let’s focus on BAN/APP ok
BAN / APP is the difference in price between YOUR BANANA AND MY APPLE
now let’s say @_bob over here love milo, which i know he does
and let’s bob likes his milo with a banana in it
so bob figures if he BUYS BAN/APP he’ll get banana’s
NO … HE WON’T he’ll be gravely disappointed
see what happens is
bob will only get the chance to SPECULATE / GUESS / GAMBLE / BET ON / HAVE A GUT FEELING /’ WHATEVER ELSE YOU WANT TO CALL IT
basically he is speculating on the PRICE DIFFERENCE between a banana and apple
so he might say… today banana’s are worth $1,00 each and apples are Worth $1,20
but then bob might say . there’s a bloody hurricane in QLD and (we all remember that , don’t we) Banana’s were like $5 or something
so… point is… BOB IS SAYING … IN 1 WEEK the price of a banana will be $5 and the apple will be $1.50
so BOB BUYS BAN/APP
so in a manner of speaking
HE BOUGHT THE BANANA SIDE FOR $1
the apple side was worth $1,20
the difference is 0.20 cents
now next week HE SELLS BAN/APP
but now BANANA IS $5
Apple is $1,50
the difference between them is 3.50
bob basically made $4
HE NEVER OWNED THE BANANA OR THE APPLE
he was speculating (From a contractual point of view) ON THE DIFFERENCE IN PRICE BETWEEN NOW AND A POINT IN THE FUTURE
hence CONTRACT FOR DIFFERENCE
does that make sense
hence why ,i think other members say things like they are a booky that takes down a bet… and yes… IN A WAY THIS IS A CORRECT WAY TO EXPLAIN IT
because they are just taking down a speculation and you are putting money on the speculation
contractually, YOU NEVER OWN THE ASSETT
you don’t even own the price
all it is is a contract that allows you to speculate on a price and if you are correct, you get paid
and if you are wrong money gets taken from you
does that make sense
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Granville! F-F-Fetch a cloth!
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wa bro i think babypips should use your way to teach men.
LOL… ok
i’ll put in the suggestion box
so… PLEASE ANSWER MY QUESTION
After that monster wall of text that you made me write, DID YOU GET IT ?
hehe
yeah i know… sorry
i can see it now
babypips employs me 
i’m teaching the newbies and it’s something like this…
YOU KNOW… THE ROOT OF THE WORD BABYPIPS IS A GREEK WORD LMFAO
AND HERE WE HAVE SOME BANANA’S AND APPLES BUT IN THE END WE ARE ALL FRUIT
1 Like
Sureshhey.
What the school says is, in theory and for the banks and big traders with real brokers, correct.
However, as I said earlier, retail traders orders are not placed in the market. Don’t let this concern you, if you have a good, reputable retail broker you will not notice any difference. If you choose a disreputable broker, that’s a different story as the charts they show you may be manipulated against your trade
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Bro, you mention he bought banana side for 1, then how about the apple side? Sold it for 1.20?
i purposely left out that part in that part so you would understand.
how about the apple side, well IT WAS WORTH 1.20
the point is … DO YOU UNDERSTAND THAT NO APPLES OF BANANA’S ACTUALLY CHANGED HANDS ?
However there was a difference in price at two different points in time
THAT’S THE POINT YOU NEED TO FOCUS ON
if you’re trying to challenge THE MECHANISM by which it occurred, well then YOU DIDN’T BUY BANANA’S EITHER
i’m just saying this so you understand
it’s just an analogy
Ok let me ask the final time , example you have this pair Eur/Usd, and you wish to buy the pair, so that means you are buying eur and selling usd right?
@Sureshhey
are you getting frustrated mate,?
how do you think i feel on my end trying to explain it to you ? hehe
so try and calm down and understand this is the problem
you said
THIS IS THE ROOT OF THE PROBLEM
So to be clear
YOU DO NOT WISH TO BUY OR SELL
but you think you do
what you are actually doing is… YOU WISH TO PREDICT WHETHER PRICE WILL INCREASE OR DECREASE
that’s what you are doing
so Your question of … if i Buy one side what am i doing to the other. is sort of irrelevant
what you are doing is
- YOU ARE ENTERING INTO A CONTRACT FOR A DIFFERENCE IN PRICE
- When you buy or sell, YOU ARE ADVISING THE BROKER TO COMMENCE THE CONTRACT
Look at it like that
does this help at all
Sureshhey, you are correct to think in terms of buying one currency and selling the other, or indeed vice versa.
The fact that in retail trading there is no currency exchange ( spreadbetting or cfd’s ) is irrelevant, it’s the cause behind the price movement that is worth thought.
An example, UK usually has a sizeable bill to pay the EU (for now at least) at the end of every calendar month.
This bill has to be paid with Euros, so the UK has to buy Euros with it’s GBP’s - hence buy Euro and sell GBP.
AS a consequence, because a particular month’s bill can be large, price of Eur/Gbp can rise reflecting this buying/selling coming into and carrying over the month end - then fall back.
No doubt on it; but BabyPips school is the best place to start with!
Spot forex trading isn’t always done with CFDs; it depends on the broker you’re using.
The babypips article on this subject perpetuates the false notion that CFDs are only for commodities and indices. In fact, you can trade CFDs in currencies (most retail traders are doing just that) and just about anything else.
This article almost makes it clear, but not quite, since whether you’re trading spot or CFDs you’ll pay swap fees and have margin requirements.
If the instrument you’re trading starts with ‘FX’ like FXEUBP you’re trading currencies for immediate delivery, otherwise, you’re probably trading CFDs and don’t even realize it.