Essential

Buying and Selling FX

The act of exchanging one currency for another. In forex, you always buy one currency while simultaneously selling another.

Definition

Buying and selling FX is the core activity of the foreign exchange market. Every forex transaction involves simultaneously purchasing one currency and selling another, which is why currencies trade in pairs. When you buy EUR/USD, you are buying euros and selling US dollars. You profit if the currency you bought strengthens relative to the one you sold.

How It Works

In EUR/USD, EUR is the base currency and USD is the quote currency
Buying the pair (going long) = expecting the base currency to strengthen
Selling the pair (going short) = expecting the base currency to weaken
Trades execute at the bid (selling) or ask (buying) with the spread as the cost

Trading Tips

Always think in terms of the base currency. Buying EUR/USD means you are bullish on the euro.

You can profit in falling markets by selling a pair. Forex does not require prices to go up to make money.

Start with major pairs like EUR/USD or GBP/USD for the tightest spreads and deepest liquidity.

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