We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Mixed
Gold
Bullish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Mixed
More View more
Real Time News
  • Get your stock market basics right - what is the stock market and how does stock trading work? Find out here: https://t.co/JfAJLAtlsY https://t.co/ZfPUxHWeiG
  • The Mexican economy contracted for the first time in almost 10 years in 2019, but growth is expected to pick up in 2020 according to its finance minister. Get your $USDMXN market update from @HathornSabin here: https://t.co/gupJdU7WYT https://t.co/mMN8LFb5i5
  • EUR/USD has been weakening since the start of 2020 and the decline has accelerated this month. At some point there will be a correction but further losses are still likely as the year progresses. Get your $EURUSD market update from @MartinSEssex here: https://t.co/ieJUBNeAIf https://t.co/Dw4f7DQocg
  • The $AUD has risen in anticipation of a deal Washington and Beijing. But the Australia-China trade relationship has not suffered much and may even have been helped by China’s spat with the US. Get your market update from @DavidCottleFX here:https://t.co/An7h5X0Zcz https://t.co/Rn7mLbS1EF
  • How can traders avoid #FOMO in trading? Start by implementing a well-heeled plan taking only four hours per week. Get your insight from @JStanleyFX here: https://t.co/vwUShQPc27 #tradingstyle https://t.co/0Wn4xBL0AY
  • Do you know which type of stock is the right investment for you? Stock types help investors decide on specific #stocks to trade or assist with valuation methods either fundamentally or technically. Learn more about stock types here: https://t.co/yO3JalkqUU https://t.co/RoNdExHAdt
  • The status of the US #dollar as the safe-haven asset of choice remains untouched and any weakness in the greenback is likely to be short-lived. Get your $USD market update from @nickcawley1 here: https://t.co/LO2u38jpUT https://t.co/ctgCJSOeTH
  • #FTSE 100 testing key support as the index lacks a directional bias. #DAX reverses off channel top. Get your indices technical analysis from @JMcQueenFX here: https://t.co/IHF2dgMfg9 https://t.co/2fMTFlOeTR
  • With knowledge of price action, traders can perform a wide range of technical analysis functions without the necessity of any indicators, including management of risk. Build on you knowledge of price action here: https://t.co/9hQA0bsYtt https://t.co/5KQowxuiBf
  • The term ‘Ichimoku,’ literally means ‘one glance,’ in Japanese. Ichimoku, or the one glance indicator, is considered to be a self-contained system in the fact that no additional indicators are necessary. Learn more about the 'one glance' indicator here: https://t.co/T7o7W9C0Ro https://t.co/7bhBfWvEkR
How and When to Buy or Sell in Forex Trading

How and When to Buy or Sell in Forex Trading

2019-02-04 13:10:00
Warren Venketas, Markets Writer
Share:
Forex buying and selling with chart

When it comes to buying and selling forex, traders have unique styles and approaches. This is because the forex market is one of the most liquid and largest in the world and as a result there is no one single way to trade.

Knowing when to buy and sell forex depends on many factors, but there tends to be more volume when markets are volatile because of the associated higher risk. This article will explore the concept of buying and selling currencies using practical examples as well as additional resources to boost your forex trading experience.

What it means to buy and sell forex

Buying and selling forex pairs involves estimating the appreciation/depreciation in value of one currency against the other. This could involve fundamental or technical analysis as a foundation of the trade. Once a basis has been formed, the trader will look to other technical and fundamental aspects. Key levels of entry and exit will follow, keeping in mind risk management processes.

Forex buy and sell quote with spread

Factors which affect currency pairs

factors which affect currency pairs

Political events

Government instability, corruption and changes in government can affect the value of a currency – for example, when president Donald Trump was elected the Dollar soared in value!

Economic policy

From a fundamental standpoint, forex traders keep a close eye on unemployment figures, GDP, monetary and fiscal policies (just to name a few) which have influence over the value of currencies. Our economic calendar shows upcoming events which may shake up the financial markets.

Technical analysis

Technical traders tend to favor key price levels (support & resistance), trends and other indicators to form a basis for their forex trades.

How to buy and sell EUR/USD

Using the EUR/USD currency pair, we will provide an example of how and when to buy or sell forex. Let’s say you want to buy the EUR/USD. If the EUR goes up in value relative to the USD once the trade is sold, you could have made a profit (depending on commission and other fees). A trader in this example would be buying the EUR and selling the USD at the same time. As an example, if the EUR/USD pair was bought at 11300 and the pair moved up to 11504 at the time that the trade was closed/exited, the profit on the trade would have been 204 pips. This is shown in the chart below.

Chart showing USD/JPY pair

In this example the technical perspective was utilized:

  • Entry level - Morning star candlestick pattern shows a potential entry point, which was substantiated by the use of the RSI indicator which displays an oversold signal.
  • Exit level – Using key price levels of to set initial take profit level.

Similarly, a fundamental trader could trade the USD/JPY currency pair by following political and economic news. For example, if a fundamental trader expected the Fed to hike interest rates, this may attract greater foreign investment into the US, and thus more demand for the home currency (USD). The trader could then look to enter into a long (buy) position in anticipation of the USD to appreciating in value. Of course, this is not absolutely certain as economic principals/theory do not always translate to real world conditions. Taking short positions on forex pairs is slightly more complex as opposed to buying. Read more on how to short forex to gain more insight.

Understanding risk management when buying and selling forex

Risk management is essential to longevity in forex trading. This does not simply include a positive risk/reward ratio but understanding the potential swings in volatility as well. Factors affecting forex pairs can have significant impacts at times so preventing adverse effects on your trade can be managed by implementing proper risk management techniques. Buying and selling forex can be complex, therefore understanding the mechanics behind it, such as how to read currency pairs, is essential prior to initiating a trade. We also recommend reading our forex guide for beginners to get a crash course on the basics of forex trading.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Warren Venketas
Look no further! Sentiment can assist with trade signals
Get My Guide

Further reading and tools to support your forex trading

  • Our research team analyzed over 30 million live trades to uncover the traits of successful traders. Incorporate these traits to give yourself an edge in the markets.
  • Traders often look to retail client sentiment when trading popular FX markets. DailyFX provides such data, based on IG client sentiment.
  • The forex market has evolved over centuries. For a summarized account of the most important developments shaping this $5 trillion-a-day market read more on the history of forex.

https://www.dailyfx.com/free_guide-tg.html?ref-author=Venketas

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.