Understanding buy/sell

this is a extra beginner question and i’m not really understanding it when it’s explained in the lessons. so i open a trade and i’m buying whatever currency … i have to sell it back make to make profit correct ?? i’m sorry if this isn’t clear but basically when i’m buying the currency it shows that i’m making xxx amount of money (while the chart is bullish) but how if i’m buying? in the lessons it says i have to sell the currency when the value goes up so what does the money being made while i’m on buy represent ?

Your confusion comes form the short-hand terms traders use - buy and sell.

In reality, you are not buying or selling anything, and you’re not the first person to be confused by this. When you place your trade, you have not bought anything, you do not own anything which you could sell. If you have taken a “long” position on e.g. EUR/USD, its because you believe the value of the EUR will rise and the value of the USD will fall, at least relative to each other. So if you are correct, and the value of the EUR does rise and the value of the USD falls, the exchange rate between them rises and you will be making a profit.

The profit you make is equivalent to what you would have made if you really had bought Euros so we call it “buying”. The benefits are the same as an owner would get.

In reality, we are betting on the exchange rate, keep focused on that relationship between the two currencies.


Here’s an analogy to explain this.

Let’s say that you bought a nugget of gold for $1,000. Subsequently the price of gold goes up. Your nugget of gold is now worth $1,500. Your unrealized profit is $500, however, in order to realize that profit you will need to sell that nugget of gold at the market price of $1,500. If you do then you will have the $500 profit in hand or in your account.

Now if you’re trading EUR/USD replace the “nugget of gold” with EUR. Does that clarify things a bit?

so it’s similar to gambling but with charts and stuff to help you predict correctly ?

True gambling is based purely on luck and there is no level of skill which can be used to increase your probability of winning - roulette, the lottery etc.

Trading is just another branch of business - you put money into a venture and hope to get more money out than you put in. you use your skills and knowledge to improve the probability of success. Nothing to do with gambling.