Currency Pairs – Further Explanation Needed

Beginner Questions
1

Hi.

I’m new to learning forex trading. I just admit, a good few times I have trouble understanding the text. This is one such example.

Can anyone explain what the below quote means? I have trouble understanding it because I can’t see why someone would buy yen as it is depreciating against the USD. Why would a person buy yen when it is more expensive VS selling the yen and then buying it again when it is cheaper, and in this way pocketing the difference?

Below is the quote from the lesson “Know When to Buy or Sell a Currency Pair”.

USD/JPY

In this example, the U.S. dollar is the base currency and thus the “basis” for the buy/sell.

If you think that the Japanese government is going to weaken the yen in order to help its export industry, you would execute a BUY USD/JPY order.

By doing so you have bought U.S dollars with the expectation that it will rise versus the Japanese yen.

2

The financial industry promotes forex trading as a matter of buying and selling, i.e. buying one currency and selling another.

This makes a kind of sense but it is more helpful practically to us traders within trading to consider forex as a matter of betting on exchange rates. So if you think the USD/JPY exchange rate is going to rise, you would “buy”: if you think its going to fall, you would “sell”. In reality, you are not either buying anything nor selling anything, we are betting.