So I hear you can sell a currency even if you don’t own any of it. If you don’t own any Euros, but the indicators show it may take a dive, you short it. But wait a minute. You don’t own any. How is it possible to sell what you don’t own? In most trading software is the command for shorting simply in there?
You don’t actually sell or buy… you bet.
You bet that eur will god down in value in comparison to the usd.
As I understand at least 
Actually, you’re speculating it’s going down. Lol
Sorry, but “bet” seems like a bad term. When you’re selling something you don’t have, you’re doing a “short selling”. So the selling of something you don’t own is called short selling. Short sellers assume that they will be able to buy at a lower price than the price at which they went short.
I know it is easier to say that you bet on the price… but sorry, I hate the term “bet” in the Forex
check this post from Clint
http://forums.babypips.com/newbie-island/43209-what-does-mean-trade-foreign-currency-2.html#post325797
Yes, that’s right. I think that Clint doesn’t like the term “bet” too, which is why he used the quotation marks
You new people… betting? Really? GTFO…
Your basically, in this case borrowing from your broker or a bank an amount to sell to someone, with the intent on buying it back at a cheaper price.
Its like for stocks, this is the explanation my math teacher gave me, If I were to want BRK.B 1000 shares and its at 78 per share, I would ask you to get me BRK.B 1K stocks at @ 78 per share so therefore I give you $78,000 to buy 1k shares of BRK.B and a time frame like say 1 month. At the end of 1 month you will have to come up with the shares now we know price moves so if the price were to say drop to $75 per share and you buy it all then net profit to you 3k. However If say it gets way too late and the deadline is near or the time expires and price is at $80 net profit to you -2k.
In fx its the same thing except my position would be a bank / another trader/ or sometimes even your broker. Your shares are the dollar pairs your playing so if you were to long the EUR/USD your buying the euro with the intent to convert it to USD when the euro strengthens. Inversely if your short your buying USD with the intent of converting it to EUR when the EUR weakens.
All you need to know is when it’s going down you go short, when it’s going up you go long, you don’t need to consider the mechanics.
Tansen, Please try reading the thread of Clint’s linked to by yunny1 two posts above yours.
The concept of a short position in the forex market is totally different to the stock market and Clint explains it rather well
Agreed on Clint’s thread being a big help to understand the matter!