Buy or Sell a Currency Pair while Trading in Forex

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Buy or Sell a Currency Pair While Trading in Forex
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Index

• The Basic of Currency Pair
• Buying a Currency Pair
• Selling a Currency Pair
• When you Buy and Sell While Trading Forex?
• Taking a Position in Forex Market

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The Basic of Currency Pair

• The basis for the buy or sell is the base
  currency.
• The traveller first sold the EUR/USD pair to do
  this he paid the base currency (euros) to get
  (i.e. to buy) equivalent dollars.
• In the second transaction, he bought the EUR/USD
  pair to do this he bought his euros back by
  paying (i.e. selling) the quote currency, i.e.
  dollars.

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Buying a Currency Pair

• When we buy a currency pair, that means we are
  buying the base currency by selling the Quote
  currency.
• Buying EUR/USD, it means that we are buying euro
  by selling USD.

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Selling a Currency Pair

• When we sell a currency pair, that means we are
  selling the Base Currency by buying the Quote
  Currency.
• Selling EUR/USD, it means that we are selling the
  euros to buy USD.

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Summary

• Buying a currency pair means that we are buying
  the Base Currency by paying or selling the quote
  currency and Selling a currency pair implies that
  we are paying by the base currency to buy the
  quote currency.
• The first currency in the currency pair is Base
  currency.

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When you Buy and Sell While Trading Forex?

• The value of currencies appreciates or depreciate
  against other currencies because of the gaps in
  demand and supply.
• From the longer-term perspective, the demand and
  supply depend on the health of the economy.
• If the economy of a country A is performing
  better than the economy of country B, then the
  currency of country A price will go up and will
  be more in demand.

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• In shorter-term, the prices move because of
  short-term speculative trading.
• You can buy the currency pair if you consider the
  base currency will appreciate compared to quote
  currency.
• So, we can sell the pair if you think the base
  currency will depreciate compared to the quote
  currency.

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Taking a Position in Forex Market

• In the Forex market, you can buy a currency pair
  when you analyze that the price of the base
  currency should go up.
• When the price appreciate, you can sell the
  currency pair to earn profits.
• On the other hand, if your analysis says that the
  price of base currency should go down, then you
  sell your first pair and when the price goes
  down.

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• Then you buy it back to cover your previously
  sold position to earn your profits.
• When you had sold without having it, you had just
  taken it on loan or borrowing from forex broker
  and had sold that, and when the price goes down,
  you buy the currency pair to close the trading
  position.
• You take a position in the Forex market when you
  buy or short-sell a pair.

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Long Short Positions

• If you buy a pair, you are said to be long pair.
  On the other side, if you sell a pair, you said
  to be short.
• Note it down that when you already have bought
  position and selling it to make a profit, then it
  is not short selling but closing or covering the
  position.
• Short-selling is when you first sell it without
  having any bought position.

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• The bottom line is that you can make a profit on
  both by going Long or Short.

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Thank You