Forex Trade For Beginners
– On this site, we are trying to provide the information about Forex Trade for beginners in an easy-to-understand manner. When you start forex trading as a new forex trader, you see many people talk about “Short Trading” and “Long Trading”. You can also see the terms “Going Short” and “Going Long”, they are the same things. Now, you can read something useful about what these terms are.
As many beginner traders do, you may think that “Short Trading” (or “Going Short”) means that buying a pair and holding it for a short period of time, maybe seconds or so, and then selling. Of course, in the same thinking way, “Long Trading” (or “Going Long”) would mean the opposite of “Short Trading”, buying a pair and holding it for an extended period of time.
However, both thoughts are entirely wrong. Actually, the terms “Short Trading” and “Long Trading” (or “Going Short” and “Going Long”) doesn’t have relation with any period of time. The terms used in the Forex market are often confusing, this is why we care about providing information related to Forex Trade for beginners.
Short and Long Forex Trade Examples
In the most straightforward, shortest explanation, “Going Short” means “selling” and “Going Long” means “buying”. Admittedly, this explanation is confusing and not informative enough for the beginner traders. Let’s have some simple examples;
– “Short Trading” (or “Going Short”) –
Assume that you are expecting USD (US Dollars) to gain some strength against EUR (Euro), meaning that if you have Euros in hand, it will lose value.
So, you can sell your Euros as EUR/USD pairs in the Forex market before EUR/USD value drops. This way, you won’t be affected negatively. On the contrary, by keeping the USD, you can make a profit. After the change which you were expecting, with this USD you obtain by selling your Euros, you can buy more EUR than you had at the beginning.
This act of making a profit out of value decrease is called “Short Trading” (or “Going Short”). In this case, you would be “Going Short on EUR”.
– “Long Trading” (or “Going Long”) –
Conversely, if you are expecting USD (US Dollars) to lose strength against EUR (Euro), meaning that Euros, against US dollars, will be more valuable in the Forex market.
In this case, you would want to buy EUR/USD pairs, before it becomes more expensive in the market. Then, after the change which you were expecting, you can sell it back for more than you pay to buy, and you can make a profit.
As you can guess by now, this method is what we call “Long Trading” (or “Going Long”). In this case, you would be “Going Long on EUR”.
Since “Long Trading” is usually easier to understand for most traders, it is more commonly used than “Short Trading” among Forex Traders. Also, “Long Trading” is considered as theoretically less risky than “Short Trading”.
Mor Info About Forex Trade For Beginners
You can read about this “theoretical risk” and detailed explanations for the terms -going long- and -going short- in our more detailed articles.
Of course, you must do your researches and training before doing your trades. So, you can decide when you will go short or go long, under the light of these information about Forex Trade For Beginners. With more experience, you will understand better, when you should go short or go long.
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