How does a sell order with forex work? Briefly but fully understanding the proces from beginning to end

Hi y’all!

So, how does ‘selling’ forex actually work?

I thought, I will share my understanding with you, and you can shoot where I go wrong. I would really appreciate the feedback!

This is how I understand it so far.

Suppose you (a broker) ‘borrows’ me 10 euros. That 10 euros is worth 12 dollars. I immediately sell those euros for 12 dollars (my sell order). Because, I expect the rate of the EUR / USD to fall.
In other words, I expect the euro to become cheaper against the dollar (so the value of the dollar against the euro will rise).

The EUR / USD rate is indeed going to fall, because I see that the 10 euro is suddenly worth 10 dollars. Then I buy 10 euros back again with my 12 dollars (those euros that you, broker, have lent me) and give the 10 euros back to you.

The money I have left, the 2 dollar, is my profit (not including spread costs).

Am I right with this logic?

Hope to hear from you!


Or you could see trading as a bet. You place a bet with the broker that if the price goes up he will pay you in proportion to your stake from your account. And if it goes down, you pay him. Your money comes from your account. His money comes from the losses of other clients who bet that price would fall.

1 Like

Or you could see trading as speculative…

That works too. Betting is a dirty word for many people.

As long as it’s not taxed, it’s okay with me…

Trouble with ‘many people’, they haven’t spent years learning how to run a business, which is the real way to treat forex trading. I would suggest any business venture is subject to being risky, but ‘many people’ would accept that logic as being entrepreneurial…

Very true. Many new traders do not treat this as a business venture or project, its more of a hobby. And although many people count for example painting as a hobby, very very few artists make any serious money from it, probably far less than the 5-10% success rate we are often hit with in trading.

thats kinda nicely explained

1 Like