Before you start trading you should understand the two methods with which you can trade

 

Long Position

 

A Long position is the act of buying a currency, with the expectation of selling it at a higher price at a later stage.

 

 

Taking a long position would apply if you believed that the currency is moving up in value, and therefore buying it gives you a chance to sell it later on at a higher price and making a profit.

 

If the currency however loses value then you don’t get a chance to sell it at a higher price, and therefore you’ve lost the difference in price which you expected to make your profit out of.

 

Short Position

 

A short position is the act of selling a currency, with the expectation of buying it at a lower price at a later stage.

 

If the currency however gains value then you’ve lost your chance to buy it at a cheaper price, and therefore lost the profit you were supposed to make.

 

Position

 

 

First Actions

 

 

Second Action

 

 

Third Action

 

 

How you make  a profit

 

 

Long Position

 

 

Buy currency

 

 

Wait for currency’s price to increase

 

 

Sell currency at the higher price

 

 

The difference between the original price you’ve bought it with, and the price you sold it at

 

 

Short position

 

 

Sell currency

 

 

Wait for currency’s price to decrease

 

 

Buy the currency at a lower price

 

 

The difference between the original price you’ve sold it at and the price you bought it at