I’ve read through the whole of the school content and understand it pretty well but there are some basics I cant be clear about.
I am assuming that when the quote currency of a pair is bought or sold the base currency is automatically sold or bought to counter this, therefore the trade stays open.
But I am thinking that if a stop loss or take profit is hit then the trade is closed.
Can someone explain this more accurately?
ok the brokers instructions may have clarified this. If I have it correct, when I buy a currency pair that was previously sold (or vice versa) this would result in 2 trades being open.
To close a trade I need to “close by buying” or “close by selling”. I still can not find this information when reading through the school though.
Is the trade closed when I have chosen “stop loss” or “take profit”? I dont know.
Perhaps its easier to think of it like this:
Let’s say you buy the pair EUR/USD. So you have BOUGHT Euros. When you take profit or close the trade manually, you will be closing it by SELLING the Euros. This is why when you buy you pay the BUY price, and when you close out the trade you end up getting the lower SELL price.
And yes, the trade will close if it hits the stop loss of take profit that you have set.
To make things simple, think of the EUR/USD as one thing…an apple?
If you buy the apple then you close out your trade by selling the apple.
And if you promise to sell the apple (short) in the future (for the current price) then you close out your trade by buying the apple and delivering it as promised.
In both cases you have no apple so you have no position in the market.
Ok thanks guys your posts have made it clearer. The only thing that upsets this is that if I highlight a position in my account and click on buy or sell (whichever the opposite of the postion) it opens another position. I have to click on “close” to end the postion.
You’re right. The platform is normally set up as follows