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How to open close a position in forex trading?

Forex trading is a complex and ever-changing market, and to be successful in it, one must have a clear understanding of how to open and close a position. A position in forex trading refers to the act of buying or selling a currency pair, with the expectation of earning a profit from the price movement of the currency pair. In this article, we will discuss in detail the steps involved in opening and closing a position in forex trading.

Opening a position in forex trading

The first step in opening a position in forex trading is to choose the currency pair that you want to trade. Forex traders usually choose a currency pair based on their analysis of the market, economic indicators, and news events. Once you have selected the currency pair, you need to decide whether you want to buy or sell the currency pair.

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If you believe that the value of the base currency will increase against the quote currency, you should go long or buy the currency pair. If you believe that the value of the base currency will decrease against the quote currency, you should go short or sell the currency pair.

To open a position, you need to place a trade order with your forex broker. There are two types of trade orders that you can use to open a position: market order and limit order.

Market order

A market order is an order to buy or sell a currency pair at the current market price. When you place a market order, your forex broker will execute the order at the best available price in the market. Market orders are usually executed instantly, and you can enter or exit a position quickly.

Limit order

A limit order is an order to buy or sell a currency pair at a specific price. When you place a limit order, your forex broker will execute the order only if the market reaches the specified price. Limit orders are useful when you want to enter a position at a specific price, and you don’t want to enter the position at the current market price.

Closing a position in forex trading

The second step in forex trading is to close the position. Closing a position means that you are selling the currency that you bought or buying the currency that you sold. The closing of the position is important because it determines whether you will make a profit or a loss.

To close a position, you need to place a trade order with your forex broker. There are two types of trade orders that you can use to close a position: market order and limit order.

Market order

A market order is an order to buy or sell a currency pair at the current market price. When you place a market order to close a position, your forex broker will execute the order at the best available price in the market. Market orders are usually executed instantly, and you can exit a position quickly.

Limit order

A limit order is an order to buy or sell a currency pair at a specific price. When you place a limit order to close a position, your forex broker will execute the order only if the market reaches the specified price. Limit orders are useful when you want to exit a position at a specific price, and you don’t want to exit the position at the current market price.

Conclusion

Opening and closing a position in forex trading is a crucial part of the trading process. It is essential to have a clear understanding of the steps involved in opening and closing a position to be successful in forex trading. In summary, to open a position, you need to choose the currency pair, decide whether to buy or sell the currency pair, and place a trade order with your forex broker. To close a position, you need to place a trade order to sell the currency that you bought or buy the currency that you sold. By following these steps, you can enter and exit a position in forex trading and make a profit.

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