Quote from lasner:
Sorry but what exactly do you mean eur will appreciate against dollar? Do you mean the euro will increase as the dollar decreases or do you just mean the euro will increase.
Lasner,
Let's say you think the EU (European Union) thus the euro will come out with some good news soon.
Let's say you get wind that the French are going to leave Europe and become part of the USA. And that all of France is going to march single file into Bakersfield, California, becoming Americans.
Maybe you think this will cause the euro to attract buyers.
And that the globe may dump (sell) the USD in a mass panic.
Therefore, you feel certain the exchange rate (of EUR/USD) will be going UP because everyone is gonna BUY euro. And it's OK with them that they SELL the US dollar.
What do you do?
Well, you could SELL euro/buy USD in order to take the contrary side (probably what I would do) because you realize that the market always loses, that is, the great majority of market participants lose their money because they are wrong about everything.
You could BUY euro/sell USD in order to go with the short-term fluctuation upward, crossing your fingers that it will work out. I'll be there with my hand open when your stop loss is hit.
Or you could open both buy and sell trades at the same time to take advantage of ANY movement in the pair. I do this too. It's a good way to make money.
Yes, in the spot or cash market, by default, you MUST buy one currency / sell the other currency in the pair.
Currencies are always paired. Think MFST/YHOO. Buy one / sell the other. Sell one / buy the other.
That is, when you SELL one you are automatically BUYING the other. And visa-versa.
If you fund your account in USD then, for example, when you open a trade your capital will be
converted into euro (buy position) in the open market, or if you short euro (buy USD) (since you are trading that particular pair) your capital in the trade will be converted into USD
in the open market thus allowing you to take advantage of the dynamic exchange rate fluctuations of the USD directly.
If the last paragraph is a bit complex to you, don't worry. Try asking a broker's definition of it.
They may give you a different, more accurate explanation.
Look up "parity," or "parity value."
If you want to try out a currency trading simulator (identical to a live account in
all regards) that quotes you LIVE market rates click on my profile and read the info.
Any other questions, please ask.
Good luck,
theexchanger
