Forex buying and selling is very important in the forex career life of every forex trader, as a matter of fact, buying and selling of securities is practically what forex trading is all about. So it is of paramount importance that every forex trader understands in depth when and how to buy and sell foreign currencies.
- WHAT EXACTLY DOES IT MEAN TO BUY AND SELL FOREX?
Forex means the exchange of one currency for another. All trades in the forex market are carried out in pairs; USD/JPY, CAD/EUR, AUD/JPY, and so on. Let us assume that trader-A is a forex trader whose trades in the USD/JPY currency pair. The first named currency, which is USD, is known as the base currency (or transaction currency from trader-A’s perspective), while the second is named currency, JPY, is the quote currency or foreign currency (from trader-A’s perspective). As a forex trader, trader-A can either buy or sell any of the currency pair hoping that the value of the pair will either appreciate or depreciate profitably.
- WHEN TO BUY AND SELL FOREX
How do you know when to buy or sell either your base currency or quote currency in order to make profits? Forex trade, you should know, is a very risky trade because no one knows, with certainty, what the outcome of a particular trade would be. It cannot be predicted, it is more like gambling. Considering the great risk involved in trading forex, when is the right time to buy or sell in the forex market? There is no right time, per say, but there are some forex trading tools that can help any forex trader know when to buy or sell a currency when used correctly. We are going to continue with the “trader-A” example and his currency pair which is USD/JPY. If trader-A sells 75000 Yen to buy 100 000 dollars, it means that trader-A is betting that the value of dollar would increase against the Yen. If trader-A’s bet if favorable, he would make profits by closing his position (that is trading the 100 000 US dollars in exchange for Japanese Yen, in which case he would receive more that 75 000 Yen).