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How do I sell something I don't have?

  • Post #1
  • Quote
  • First Post: Aug 16, 2005 11:48am Aug 16, 2005 11:48am
  •  MikeG
  • | Joined Aug 2005 | Status: Empowered to Profit by James16.com | 59 Posts
Hi everyone,

I read that a forex trade is "simultaneous buying of one currency and the selling of another".

When I finally do open an account I will be putting in US dollars. Since that is the only currency I will have I will "sell" it to buy another non-US currency. Is that right? I'm looking at AUD/USD and USD/CHF. The USD is on the left in one and on the right in the other. What position does the USD have to be in in order for me to sell it. I guess I could only trade one of these. Would this also mean I wont be able to trade things like EUR/JPY or EUR/GBP because neither of them has USD in it?

Also, I know that CHF is Swiss Franc, but what does CHF mean? I thought Swiss Franc would have been SWF? Also, what is cable?

Thanks everyone!

Mike
I am an extremely satisfied customer of the James16 Group!!!
Hi Mike,

I laughed out loud (NOT AT YOU) when I read the title of your post because it reminded me that my wife asked the same question many months ago when I tried to explain forex to her. It is a great question and the idea of selling something you dont have truely does not make sense at first glance.

I told her I rented the pair for the cost of the spread and then was planning that it would go up if I bought and down if I sold. That was the best I could do.

Cable is the GBP (Great Britan Pound) / USD (United States Dollar) pair.

You can trade any pair that is listed in the dealing rates your broker posts. It doesnt matter that your account is in US dollars.

Hope this helps some.

Lou
Mike,

This could help you quite a lot: again .... free info.

Go to the main Forex Forums window... find the Forum for Classifieds.

Go there, ignor everything else and scroll down to a thread that says something like Forex ebook for Newbies... it is by JetHeat. It is free.

Look at that free part only -- download it or whatever you wish. It will ask you if you want to purchase more. Wait on that decision until you know enough to want it or not want it. Ignor the hype. Ignor the hype! Jetheat is a good guy. But you are looking for the Basics... and that is what that feebie book will provide. Dont feel obligated. Then come back to the forum with more questions.

Lou
Quoting MikeG
Hi everyone,

I read that a forex trade is "simultaneous buying of one currency and the selling of another".

When I finally do open an account I will be putting in US dollars. Since that is the only currency I will have I will "sell" it to buy another non-US currency. Is that right? I'm looking at AUD/USD and USD/CHF. The USD is on the left in one and on the right in the other. What position does the USD have to be in in order for me to sell it. I guess I could only trade one of these. Would this also mean I wont be able to trade things like EUR/JPY or EUR/GBP because neither of them has USD in it?

Also, I know that CHF is Swiss Franc, but what does CHF mean? I thought Swiss Franc would have been SWF? Also, what is cable?

Thanks everyone!

Mike
Hi Mike,

Bless your heart for asking that question! I never quite understood how the "buying one and selling another" worked either. After a while I realized it was one of those non-essentials that one doesn't have to know in order to trade. Like Lou said, you can trade any pair your broker offers, regardless of the currency you fund your account with.

Switzerland's official name is "Confederation Helvetica" which explains the CH in CHF.

Do heed Lou's warning to ignore the hype if you decide to read Jetheat's free excerpt from his ebook. And while I'm on that topic, since you said you've been researching forex on the net, I'm sure you've already discovered that there are a ton of people out there selling systems, ebooks and signal services. 99% of them are pure crap! You can learn everything you need to know about trading for free on this forum, and from the books on Merlin's list. As fantastic as this forum is, you wont learn how to trade if this forum is your only resource. I hope you like to read 'cause you're gonna have to to play this game successfully.

Cheers

Dial
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If I am not mistaken, what happens when you buy/sell currency is that your broker "lends" you money so that you can buy other currency with it.

For example, let's say you buy 1 mini lot (10,000 units) EUR/USD. In this case the broker lends you about $12,000, with which you buy €10,000. Notice that this makes irrelevant the currency your account is nominated in. If you made your deposit in doubloons, or the ever volatile peso argentino, at your broker account, the process would still be the same: broker gives you $12,000 in order to buy €10,000. This means that you can buy/sell any pair independently of what you deposited at your broker.

The case in which you sell EUR/USD is simply the opposite: your broker lends you €10,000 with which you buy $12,000.

Of course this is the same with all pairs: when buying 1 minilot GBP/JPY, your broker is lending you 10,000 pounds worth of yens, which you then use to buy 10,000 pounds.

The "margin requirements", again if I'm not mistaken, are simply a way of limiting the amount of money you can "borrow". The broker will "put aside" some of your money whenever you're buying/selling anything.

I hope this clears the matter. I also hope I'm right

Best regards,
Bonete
Quoting MikeG
Hi everyone,

I read that a forex trade is "simultaneous buying of one currency and the selling of another".

When I finally do open an account I will be putting in US dollars. Since that is the only currency I will have I will "sell" it to buy another non-US currency. Is that right? I'm looking at AUD/USD and USD/CHF. The USD is on the left in one and on the right in the other. What position does the USD have to be in in order for me to sell it. I guess I could only trade one of these. Would this also mean I wont be able to trade things like EUR/JPY or EUR/GBP because neither of them has USD in it?

Also, I know that CHF is Swiss Franc, but what does CHF mean? I thought Swiss Franc would have been SWF? Also, what is cable?

Thanks everyone!

Mike
diallist is right mike understanding it really does not matter. if you are in the eur/usd and you think its going down sell, if you think its going up buy.
  •  MikeG
  • | Joined Aug 2005 | Status: Empowered to Profit by James16.com | 59 Posts
Thank you very much to everyone who replied! I am amazed how generous everyone is here!

Thanks especially to you Bonete for that clear explanation. It makes perfect sense now!

I'm really having fun reading all the posts here, even if I dont understand 99% of the yet!

Thanks everyone!

Mike
I am an extremely satisfied customer of the James16 Group!!!
Mike.

I wish the best in your quest to trading the forex market. Stay at it Brother.
  • Post #9
  • Quote
  • Last Post: Aug 17, 2005 1:25am Aug 17, 2005 1:25am
Quoting MikeG
Hi everyone,

I read that a forex trade is "simultaneous buying of one currency and the selling of another"......Mike
At least the hungry fish looks great surrounded by blue corral...
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