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Long
trade /short trade
When you said long for EUR/USD currency pair mean you are buying
the EUR and selling the USD. In the event, the exchange
rate goes up let say from 1.5720 to 1.5760, this trade becomes
profitable, unfortunately, if the exchange rate goes down, this
trade becomes a losing one.
On the other hand, if you said short to the currency pair EUR/USD,
you are selling the EUR currency and buying the USD. Let say the
exchange rate from 1.5720 to 1.5700 this trade becomes profitable.
If the rate goes up, this becomes a losing one.
At all time, we are focused on whether a certain currency pair will
go up or down, If we anticipate that the currency will go up, we
conduct a long trade ( Buy ), if our anticipation tells us that
it is likely to be go down, we conduct a short trade ( Sell ).
Regardless of
long trade or short trade, the first listed currency is always the
base currency. For example, in the GBP/JPY currency pair, if we
enter a long trade ( buy ) we are buying GBP and selling JPY.
What profit will we make or how much will we lost? How to calculate
our P/L? We move on to Forex pip.
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