The Authority’ on Price Action Trading. In 2016, Nial won the Million Dollar Trader Competition. Part 3: Long or Short ? In the case of a non-Forex example though, selling short seems a little confusing, like if forex pip value formula were to sell a stock or commodity.
The basic idea here is that your broker lends you the stock or commodity to sell and then you must buy it back later to close the transaction. Another great thing about the Forex market is that you have more of a potential to profit in both rising and falling markets due to the fact that there is no market bias like the bullish bias of stocks. Anyone who has traded for a while knows that the fastest money is made in falling markets, so if you learn to trade both bull and bear markets you will have plenty of opportunities to profit. When we go long it means we are buying the market and so we want the market to rise so that we can then sell back our position at a higher price than we bought for.
This means we are buying the first currency in the pair and selling the second. So, if we buy the EURUSD and the euro strengthens relative to the U. When we go short it means we are selling the market and so we want the market to fall so that we can then buy back our position at a lower price than we sold it for. This means we are selling the first currency in the pair and buying the second. So, if we sell the GBPUSD and the British pound weakens relative to the U. Now it’s time to cover order types. A limit entry order is placed to either buy below the current market price or sell above the current market price.
If the EURUSD is currently trading at 1. 3200 and you want to go sell the market if it reaches 1. 3250 it will fill you short. Thus, the limit sell order is placed ABOVE current market price. If you want to buy the EURUSD at 1.