Most basic question

Hi folks,
I’ve been on this forum for a while, but rarely visit. I have a very basic question. Please bare with me.

Why would you need to buy on the forex market ? I know you are selling at the same time to make a profit, but why the need to buy a currency ?

Are you buying currencies to sell later ? Is it all about selling in the end ?

Outside the forex world, you are always selling a service or product, to make a profit.

Maybe I’m just being dumb, and I know it is quite a simple way to look at things, but I want to know what people on here think.

Many thanks

We’re not buying currency, or selling it. We are betting with a broker on how the exchange rates between two currencies will change. So for example if you think the exchange rate between the Euro and the US Dollar will rise, you “buy” EUR/USD: or it can be stated as going long on the EUR and short on the USD.

2 Likes

Remember that one of the best free gifts in forex is a demo account with a broker - you don’t pay anything for a demo account and you not only get to try out their trading software and customer service, but you can also test out and learn different strategies without any risk of even losing a penny.

2 Likes

Just to add to what tommor has said, “If you think one currency will be stronger versus the other, and you end up correct, then you can make a profit.” :blush: Hmmm. :thinking: Have you gone through the school here? :blush: You might want to give it a try! :smiley:

Thanks all for the answers. Yes, I did. I guess for some reason this little nugget kept bothering me, and I have used a demo account before.

Perfect explanation.

Thank you. Unfortunately, many folk don’t like the idea of betting on their own religious grounds, nor the association with gambling… Hey ho…

1 Like

Basically it not physical buying or selling of the asset. This is CFD i.e. contract for difference, where you just speculate on the price of the underlying asset.

But there is a distinction between betting and gambling. It can be argued all large hedge funds etc gamble but they dont they have an edge similar to how successful traders do. I suppose people have to be flexible in their interpretation

The distinction between the two types of gambling is simple but unfortunately we don’t have the vocabulary in English.

The first type has random outcomes and the player cannot affect these through skills or knowledge - roulette, the lottery, etc. The other type includes forex trading - and almost all other human endeavours.