Hi guys,
This might be a rookie question, but how is it possible to make pips while a pair is going down?
Those who read the daily update for Cowabunga System, some trades had been made while the pair (GRB/USD) was going down. And he is calling those trades as “Short Trade”
I do not think that i have quite understood that yet. ???
Thanks in advance !!
Your question implies that you understand the concept of buying a currency pair, and then making a profit when the price rises and you later sell it.
Buying a currency pair in this way is called “going LONG”, or “taking a LONG position”. You made a profit because you bought low and sold high.
SELLING SHORT is just the opposite. You open a new position by selling first; then, later, you close your position by buying.
If the price of the currency pair declines after you sell short, then when you buy it back, you make a profit, because you sold high and bought low.
In the examples, above, a currency pair was treated as a single “thing” which you can buy or sell. But, a currency pair is obviously a combination of two currencies, as well; and its value is determined by the relative values of those currencies.
Whenever something affects the value of an [B]individual currency[/B], we can easily determine how that will affect the value of a [B]currency pair [/B]involving that currency.
Take the GBP as an example. Suppose some bad news comes out, negatively affecting the pound (GBP). We know immediately that this news will tend to push the GBP/USD [B]down[/B], and it will tend to push the EUR/GBP [B]up[/B].
As a general rule:
[B]If the value of the base currency rises, the value of the currency pair rises.
If the value of the base currency falls, the value of the currency pair falls.
If the value of the cross currency rises, the value of the currency pair falls.
If the value of the cross currency falls, the value of the currency pair rises.
[/B]
Make sure you understand why these statements are true.
I hope this answers your questions.
Clint
Hello Clint
Thank you for your explanation on short selling, now i understand what is happening.
So far i have been going long and while my demo account raise from 50 000 to 51 720 it took a long time. Possibly i could trade on selling short but until your simple explanation i was unable to do so (being new to FX trading).
I will try short sell next time, see what happen.
Once again - thank you 
This explains everything !! Thank you Clint !