Dumb,Dumber and Dumbest question

Absolutely new to Forex. If there is a better site for
extreme newbies I will be glad to go there, just need directions.
Otherwise I need lots of mentors.
Just started reading about Forex a couple of hours ago.
I am basically stuck on the first few sentences.
I thought the idea was to buy a currency at a low price
and then sell it at a higher price. Obviously this is
not how it works as everything is quoted in pairs.
Can anyone pretend they are talking to a five year old and
explain what is happening when you buy the currencies in pairs.
I know this must be the dumbest of questions, but if you have
had no exposure to Forex whatsoever it is pointless me reading
on as nothing is making any sense.
Plenty more dumb questions to come.
Thank you

aussie 11

Welcome to the forums

First and foremost, there is no such thing as a dumb question. As an old chinese proverb goes “he who asks is a fool but for a moment, he who never asks is a fool forever” :slight_smile:

I think a great place for you to start is at the babypips school. They take it one step at a time and, in my opinion, do a great job of teaching the absolute newbie in a very straightforward, down to earth fashion.

In case you did already start and are still lost, the basic answer to your question is as follows:

When you are buying a pair you are in fact hioping to buy it low and sell it high. When you are short selling the pair you are hoping to sell high and buy low. I am not sure how familiar you are with the concept of short selling, though. So, if i confused then sorry.

As you know everything is quoted in pairs. So, let’s take the EUR/USD as an example. If you anticipate the pair to increase in value you are basically speculating that the EUR will appreciate vs. the dollar. If you wanted to act on that point of view, you would essentially have to BUY or go LONG the pair. This means that you are buying the EURO and selling dollars simulataneously.

If, on the other hand, you anticipate the pair to decrease in value, you are speculating that EUR will depreciate vs. the dollar. If you wanted to act on that you would have to SELL or go SHORT the pair. This means you are selling EURO and buying dollars simultaneously. Thinking in terms of the first currency as the basis of decisions helped me out.

Essentially, what you do for the first currency of the pair implies that you are automatically doing the opposite for the second currency in the pair.

If your understanding of this whole thing would be facilitated by thinkning in terms of dollars, then that is fine too. You just have to reverse your thinking if the first pair in the currency is not USD. So if you wanted to trade exclusively the EUR/USD and wanted to try and capitalize on an appreciating dollar, then you have to consider shorting (selling) the pair.

Hello Pipbull
I thank you for your clear and concise explanation of the concept.
It is amazing that the information I have had to read so far does not address this simply question. I didn’t come to the forum via the home page when I signed up so I didn’t realise that there is education and schooling, but I plan to spend today reading what I can. I hope you will be around for my next round of dumb
questions as your method of explanation is very good and clear.
Thanks again

I’ve been trading for about three months, not real successfully. And I found the school to be very helpfull. I even had my wife take the course. I traded with the trend for 20 pips today on a few strong trending pairs and was successfull on all three.