What are we trading?
What Are We Trading?
When we place a trade in the forex market, we are buying one currency and selling the other. This is why forex is traded in currency “pairs.” As a visual example, we can reference the image below.
But in the forex market, we can trade the other direction as well. So we could sell the EUR/USD, effectively selling euros and buying dollars. With that trade, we would want the EUR/USD exchange rate to fall so we can buy back the euros for less dollars than we originally sold them for.
So not only do we have a goal of buying low and later selling high, we have the option to sell high first, and then buy low later.