One of the most important concepts every beginner needs to be familiar with is forex trading and how to buy and sell.
Buying in the forex market means that a trader wants to sell a counter currency to buy a base currency.
Selling in the forex market means that a trader wants to sell the base currency to buy a counter currency.
If you are not yet familiar with currencies and their types, read our article on currency pairs.
The foreign exchange market is the largest financial trading market.
It is decentralised and has no fixed location for currency exchange.
However, traders buy and sell on the market every minute of the day.
Remember that the foreign exchange market is always open 24 hours a day, 5 days a week.
A very large number of currency exchanges take place during these 5 days.
Some of these trades end in profits, others in losses.
Furthermore, a beginner must understand that some traders make profits at a given time, while others lose their money.
When the analysis of a trade matches the movement of market prices, the trader makes a profit.
A trader loses when his analysis does not match the price movement.
Furthermore, a strong upward price movement on a market chart indicates an intense buying phase.
A strong downward movement on a market chart indicates an intense selling phase.
Remember that an upward movement equals an upward price movement.
A downward movement equals a downward movement.
The main question is: “How do traders buy and sell?”.
How do you buy a currency in the forex market?
Remember that currencies are quoted in pairs on the forex market.
If a trader analyses the market and wants to buy a currency, all he has to do is the following:
- Click on the order icon on his trading platform (be it mt4 or mt5).
- Set the order (a stop loss or a take profit).
- Click on buy to open the position.
As I have already mentioned, buying a currency means that the trader sells a counter-currency to buy a base currency.
How to sell a currency in the forex market
If a trader decides to sell a currency after analysing the market, all he has to do is the following:
- Click on the order icon on their trading platform.
- Set an order (stop loss or take profit or both).
- Click on ‘Sell’ and the trade is opened.
How do traders make money by buying and selling in the forex market?
Again, trading in the forex market involves a certain amount of risk.
For this reason, many traders lose their money. However, some traders also make big profits.
Here is a simple explanation of how traders make profits in the market.
A trader makes a profit when his analysis matches the price movement on the financial market.
If a trader places a buy order during a bullish session, he ends up making a profit.
If a trader places a sell order during this phase, he will lose the trade and incur a loss.
If a trader places a sell order during a sell session, he will make a profit.
If he places a buy order in a sell session, he will lose the trade.
Frequently asked questions (FAQ)
Is it possible to buy and sell at the same time?
Yes, it is possible.
A trader can buy and sell a currency at the same time. However, the net profit on such a trade is zero.
What is the best time to buy the US dollar?
The US dollar is one of the currencies traded most often by traders on the foreign exchange market.
However, the best time to trade this currency is during the New York trading session.
This is the time when most traders buy and sell the currency around the world.