Forex trading is a popular way to speculate on the value of different currencies. As a forex trader, you have the option to buy or sell a currency pair. But when you sell forex, do you want it to go up or down? The answer to this question depends on the type of trade you’re placing.
In forex trading, you can either go long or short on a currency pair. When you go long, you’re buying the first currency in the pair and selling the second currency. For example, if you buy the EUR/USD pair, you’re buying euros and selling dollars. You go long when you expect the value of the first currency to rise against the second currency.
On the other hand, when you go short, you’re selling the first currency in the pair and buying the second currency. For example, if you sell the EUR/USD pair, you’re selling euros and buying dollars. You go short when you expect the value of the first currency to fall against the second currency.
So, when you sell forex, you’re actually going short on the currency pair. This means you want the value of the first currency to fall against the second currency. Let’s take an example to understand this better.
Suppose you sell the EUR/USD pair at 1.1000. This means you’re selling euros and buying dollars at the exchange rate of 1.1000. Now, if the exchange rate falls to 1.0900, you can buy back the euros at a lower price and make a profit. This is because you sold the euros at a higher price than you bought them back.
However, if the exchange rate rises to 1.1100, you’ll have to buy back the euros at a higher price than you sold them for. This means you’ll incur a loss. So, in this case, you didn’t want the forex to go up because it would have resulted in a loss for you.
In summary, when you sell forex, you want the value of the first currency in the pair to fall against the second currency. This is because you’re going short on the currency pair and want to make a profit by buying back the first currency at a lower price. However, if the value of the first currency rises, you’ll incur a loss.
It’s important to note that forex trading involves a high degree of risk and is not suitable for everyone. You should carefully consider your investment objectives, level of experience, and risk appetite before entering the forex market. It’s also advisable to seek the advice of a professional financial advisor before making any investment decision.
