Hey, So I have a question that is probably dumb. I know if I buy a share on a stock and it goes up, I make money and who ever short sell that stock they lose money. How does it work in Forex?
For most private retail traders, forex is literally like placing bets. When we say you’re buying the USD/JPY, you won’t actually receive any physical $ in your account and you won’t have to use Yen to pay for them. You’re just making a contract with the broker that if the rate between the two currencies goes up, they will pay you in proportion to how much you staked and how far price rose. Like with bookmakers or casinos or the lottery organisations, the losers pay for your winnings.
As far as I know the short selling of stock is dissimilar from the shorting of currency. However to secure position, a currency trader can take help from forward contract where he will be able to buy or sell specific currencies at some point of time in future to prevent his wealth position against unwanted price fluctuations.
The short answer is the other traders. When you place an order in the marekt it has to be matched by someone on the other side, thats how liquidity is made
i think you got the whole answer by tommor, thanks for nice post.