How does forex shorting work?
Shorting currencies is an inherent part of forex trading. This is because when you trade forex, you are going long on one currency while you are simultaneously selling another. As a result, when you trade forex pairs, you are actually making a bet that one currency in the pair will appreciate in value relative to the other, or vice versa.
If you went short on a currency pair, it means that you expect the base currency to weaken against the quote currency. All currency pairs have a base currency and a quote, with the cost of the pair being how much of the quote currency you would have to sell in order to buy one of the base.
In the image below, you would go short on the EUR/USD currency pair if you believed that the euro would depreciate relative to the dollar, meaning it would cost fewer dollars to buy one euro – perhaps $1.1000 instead of the current $1.2000.
In doing so, you would effectively be selling euros in the expectation that they would decrease in value over time.
https://www.ig.com/us/trading-strategies/learn-how-to-short-a-currency-190712
2019-07-12 21:19:14Z
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