Hey all,
Been trying to get my head around this
If you want to buy (which actually means buy the base currency and sell the quote currency) you want the base currency to rise in value and then you would sell it back at a higher price.
I dont get how I would buy a trade and sell at the same time.
Very sorry if its a simpleton questions but I think im over thinking this and confusing myself
The easiest way to think about this is that you are not physically buying or selling anything.
You are making a bet on the direction of the exchange rate of a currency pair.
For example, if you think GBP/USD will go up, you buy or “go long”. If you think GBP/USD will go down, you sell or “go short”.
Ok I am starting to get it
If the pair is go up ill go long by purchasing GBP/USD right?
Going short is confusing me
When I go short, what transactions take place, its going down what would I go about making the bet purchase USD?
When you go short, you’re speculating on the direction of the exchange rate of GBP/USD that it will go down.
You’re not purchasing USD. What happens is that when you click “Sell”, you enter into an agreement on your trading platform at price X, and when you close the trade at price Y, if price Y is lower than price X, then you get paid the difference (gain). If price Y is higher than price X, then you pay the difference (loss).
Ok I get it now.
After todays study session I felt I knew less then when I started but you’ve turned that around.
Thank you.
Have you read this?
Taking a long or short position comes down to whether a trader thinks the base currency will appreciate or depreciate, relative to quote currency. Simply put, when a trader thinks the base currency will appreciate they will “Go Long” the quote currency, and when the trader expects the base currency to depreciate they will “Go Short” the quote currency.