what is sell in forex

by Dec 31, 2020Forex Order Types

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What is Sell in Forex

When you start trading on the Forex you can do two things. One thing is to open buy order and the other one is sell.

Sell refers to opening a sell order type with your money which you have invested on your trading account. When you open a sell order you will own a currency pair in a certain amount and you will plan that the price of a currency pair will fall down.

The amount of a currency pair you sell in Forex is defined by you when you open a window for a new order.

If you are just starting with Forex you will see now what is sell Forex order type and how to make sell transaction.

How to Open Sell Order in Forex

You need to know how to open an order on a trading platform. That is done with selecting “New order” in the Metatrader 4 platform.  

Open-order-step-1

When you select “New order” in the new window you need to select what you want to do.

That window is shown under this text.

In your case you want to open a new Sell order in Forex so you need to press “Sell by Market” which is the red button on the bottom left side of a new window.

Some data you see above is standard data and you can change any of the data if you want. Each data represents something and what is what you can learn by reading how to open and close order in Metatrader 4.

In our case we will not change anything because right now you need to know what is selling  currency pair in Forex.

What is Sell in Forex_example EURUSD_2

Bid Price

Price line under the Ask line is the Bid price that tells you what the price is when you want to sell a trading pair. It means when you open a sell order you will pay at 1.13293 price.

How to explain to yourself how to read the Bid price in a logical way?

When you are in front of the chart you need to see what market says how much are they willing to pay to buy currency from you:

  • what is the price you want to sell to the market, meaning what is the price you are able to sell currency at to the market

The chart with Bid price is shown below to give you more details how Bid price looks like on the live chart.

What is Sell in Forex_example EURUSD_1

When you click on the “Sell by Market” button a new window will show you a message that says you have successfully opened a Sell order at a certain price. 

What is Sell in Forex_example EURUSD_3

New row will appear in the window called “Terminal”. Terminal window shows all orders you have open.

If you sell even more of a currency pair you will see more rows. Each row will have its own profit column so you can track how each trade is doing.

What Does Sell In Forex Means

Sell in Forex means predicting that the price of a currency pair will move down. When the price is moving down the value of a currency pair is declining.

If you sell a currency pair in Forex you will make money only if the price moves down. If the price changes direction and starts to move up, you will lose money.

Sell in Forex means that the price in a certain period of time will move down. The time frame in which you can see the price change can be from one second to several hours or days.

I will show you now how the sell order looks in Forex and how the profit changes in time.

What is Sell in Forex_example EURUSD_4

The image above shows you one sell order I have open and which I will track through one period. The period in which I will track the change is M5 which is equal to five minutes. Every five minutes one candle will form on the chart.

I want to show you what sell in Forex means and how you will make money or lose money.

If you open a sell order which means you expect the price will decline from the time when you have an open sell order. When the price starts to decline you will see that the profit will increase.

If the price starts to rise up above the entry price at which you have an open sell order, you will see your profit will be negative. That means you are losing money.

Sell Order in Forex  – Example

In the image below I have executed a new sell order with  market execution which was 1.13287.

The price has started to rise after 5 minutes and my profit is -$20.00. If I close right now the sell order I will lose $20.00.

Another option I have is to wait longer and see if the price rises or falls down. If it falls below the price at which I have an open sell order I will make money.

If the price continues to rise up I will lose even more money. I will lose that money only if I close my sell order. If I do not close the sell order and the price returns back down below the price at which I have an open sell order I will not lose money.

When the price starts to move sideways which means not going up or down I will not make or lose money.

Sideway moving is not something you want to see because at that time you are not making money. You want to see the price moving up or down.

In the case when you have a sell order you want the price to move only down.

What is Sell in Forex_example EURUSD_5

I have decided to wait a little bit more to see what will happen. The price has returned down and my profit is $3.00.

Now I am in plus for $3.00.

As you can see on the image below, 3 candles before, which is 15 minutes (3x 5 minutes candle) the market is moving sideways.

When the market moves sideways the price stays around one price. When the price does not change my profit stays the same. I am not losing or making money.

You as a trader should look for the market that does not move sideways too often because you will not make money.

What is Sell in Forex_example EURUSD_6

The image below shows the candle which now is lower than the price I have open sell order.

The profit I have on my account is $3.00 which is a nice profit in a very short time.

What is Sell in Forex_example EURUSD_7

Close Sell Order in Forex

When you are ready you can close order at any time. If your trade is in profit or in minus you can close the order.

Your goal should be to close order only when you are in profit so you do not lose the money.

You need to remember that the profit or loss you see in the column “Profit” will not be added or taken from your account balance until you close order.

While I am in profit I will close the order so I can have that profit on my account balance.

To close order you need to double click on the row where your order is. Anywhere on the row double click and a new window will open.

The new window is shown below on the image. Wide yellow button shows “Close #xxxxxx” which is your order.

Click on that yellow button and new window will be shown.

What is Sell in Forex_example EURUSD_8

When you click on the yellow button the new window will show you confirmation that your order is close.

Details about closed order shows you at which price you have closed order.

What is Sell in Forex_example EURUSD_9

Positive Sell Order in Forex

When the order is closed you can see that there are no rows in the “Terminal” window.

Your profit is added to the Balance amount. In the example above I had $3.00 profit.

That is why my Balance is $10 025.00. This profit is nice to see, but have in mind that I could end up with loss on my account. The loss would be visible if I had closed the order when it was in minus for -$20.00.

I have waited and the price has changed the direction and losing trade became a positive one.

What is Sell in Forex_example EURUSD_10

If you want you can open a new order and wait for some time. If the price of the pair moves in your direction you will make money.

When you close the order, what you have in the column “Profit” will be added to your Balance column. Will that be a positive or negative amount? It depends on you and your ability to predict the correct direction of the price.

Conclusion

Sell in Forex is one of the two options you have when trading. Sell is selected only when you think the price will move down.

If the price move down you will make money and if it moves up you will lose money.

The money will be added or deducted from your trading account balance only if you close open order. Until the order is not closed, your result can change.

When selecting which pair to trade, try to find a pair which is volatile. Volatile pairs in Forex will give you more opportunities to make money.

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“Disclosure: Some of the links in this post are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. This does not cost you anything extra on the usual cost of the product, and may sometimes cost less as I have some affiliate discounts in place I can offer you”

Frano Grgić

Frano Grgić

A Forex trader since 2009. I like to share my knowledge and I like to analyze the markets. My goal is to have a website which will be the first choice for traders and beginners. Market analysis is featured by Forex Factory next to large publications like DailyFX, Bloomberg... GetKnowTrading is becoming recognized among traders as a website with simple and effective market analysis.

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