Hey just a question on selling Forex.
I am going the lessons on BabyPips and opened a few demo accounts just to play around and get a feel for them.
One thing I have noticed is that I am able to sell a currency pair, even though I have not bought anything.
How is it possible to sell currency pairs such as GBP/USD, if I haven’t bought them in the first place? I opened a demo account with a few places and both started me out with a few thousand dollars to play with. I notice that I can sell without ever buying, so I’m not sure what is being sold.
I know with stocks, you can’t sell the stock unless you’ve bought it, so this is where I am a little confused.
Any help with this would be appreciated.
How is it possible to sell currency pairs such as GBP/USD, if I haven’t bought them in the first place?
Short GBPUSD = LONG USDGBP
In a way, Yes but not quite.
FOREX = FOREIGN EXCHANGE.
You exchange money.
[B]SHORTING[/B]
When you SHORT GBPUSD, what you are doing is SELLING the GBP and BUYING the USD. You believe the GBP is going down and the USD is going up.
When you COVER OR EXIT the SHORT TRADE, you BUY the GBP and SELL the USD.
[B]BUYING[/B]
When you BUY GBPUSD, what you are doing is BUYING the GBP and SELLING the USD. You believe the GBP is going up and the USD is going down.
When you SELL OR EXIT the LONG TRADE, you SELL the GBP and BUY the USD.
That’s why it is currency PAIRS.
Understand?
1 Like
That makes sense.
The last thing I don’t get and I’m not sure if it’s related to my above questions is how I can trade EUR/JPY when my demo account only started me with $2000 USD. I understand from reading through this site that you sell the quote currency in exchange for the base currency. So when I purchase EUR/JPY, I am selling JPY and buying EUR. What doesn’t make sense is my account has $2000 USD, so how does it allow me to buy EUR/JPY when my account only has US Dollars in it. I don’t have any JPY to sell in exchange for the EUR.