I’ve been poking around at some forex brokers online, as well as checking out Metatrader4 since that seems to be the go-to application for most sites. However, something has been confusing me…
Say I start with USD. First I trade that USD for GBP. I then want to trade that GBP for JPY. Once I have JPY, I finally trade it for USD, leaving me with USD in my account (and hopefully a profit).
However, everything I’ve seen implies that when I buy a currency pair–say, USDGBP–the only option to close the trade is to then sell it back. If I were to open the three buy/sell orders to theoretically trade in a complete loop, instead of ending with USD, it’s almost as if I have simply picked up three entirely unrelated stocks.
To put it another way, imagine if I went to a physical bank and traded my dollars for pounds. Then, with those pounds in hand, I asked to trade it for yen. Then once I had yen, I asked to trade that for dollars.
Instead, what I’ve seen when testing demo accounts with Metatrader4 feels more like I’m bidding on if a currency pair will rise or fall in value, and less like I’m actually trading one currency for another.
Is trading one currency for another in the way I described something that’s possible with online forex brokers? If it is, how would I go about doing so, and/or finding brokers that allow it? Am I just overlooking something obvious (or perhaps even running in to a limitation of Metatrader4 itself)?
(Note: I’m specifically wondering if this is doable, not if it is profitable. I’m savvy enough with numbers to figure out the latter; it’s the former that’s driving me nuts!)