Difference Between Buy And Sell In Forex
You can have two main choices in Forex and that is buy or sell currency pair. Any choice you select will give you money or it will take money from you.
I will not get into too much about what is buy in Forex and what is sell in Forex, because I have cover each question in another article. Just click on the link I have put here and you can get more details about it.
Main difference between buy and sell Forex order type is your prediction where the price will go.
The price can go in three different directions.
Price Moves Up on the Chart
First direction is up and that is when the price of the currency pair is rising. That is visible on the chart I have provided below.
Whenever you see price change in time, and time can be specified in different time frames, that change must be towards UP on the chart.
When you want to open buy order and if you want to make money you need to predict when the price will move up in the future.
If you do not predict correct time to enter and that means you open buy order and the price moves down, you will lose money.
Buy in Forex is different from sell because with buying currency pair you are predicting the price will move up. The value of a base currency will rise in time against quoted currency.
If you make wrong prediction you can lose money, but the amount you lose, you can control with stop loss.
Price Moves Sideways on the Chart
Second direction is sideways and that is when the price of a currency pair is moving from left to the right on the chart.
The price does not move from right to the left because the price changes in time and time is moving forward. On the chart timeline is shown from left to the right.
The time line you can see below on the chart where is located line with time and dates.
When sideways moving happens it means the price does not change a lot. It can change in specific range area. That range area is defined by the range between two prices.
Range can be small area or wide area, but all depends on the time frame you are looking at.
On the larger time frame you will have wide area with large difference between two prices, and on smaller time frames you will have narrow area with small difference bettween two prices.
Difference between sell, buy and sideways moving is in sideways moving the price does not change a lot. You cannot make money because Forex is a market where you decide will the price move up or down. Not sideways.
Sell or buy cannot help you make money in sideway moving market, so try to avoid this kind of market behaviour.
Price Moves Down on the Chart
Third direction where the price can move is Down. That is when the price of the currency pair is declining. That is visible on the chart I have provided below.
When the price changes in time, that change must be towards down on the chart. When the price moves down it means that base currency is losing its value against quoted currency.
What you do with the sell is that you are predicting the price will continue to fall down. If you predict correctly you will make money.
Your job is to catch as many pips as you can to make money.
The move down can be in several steps. As you can see the chart shows you not the straight line down. The price stopped at some level, moved sideways and then continue to move further down.
When the bearish sentiment finished the price started to move up.
Bearish sentiment is when the price is moving down for a certain period of time. That time can be few days if you are looking on the daily chart.
Difference between buy and sell is only in predicting will the price move DOWN or UP.
Buy order in Forex will bring you money if you open a trade when the price is moving UP. If you enter into buy order and the price moves DOWN, you will lose money.
Sell order in Forex will bring you money if you open a trade when the price is moving DOWN. If you enter into sell order and the price moves UP, you will lose money.
Buy or Sell in Forex does not work if the price moves sideways. Sideway moving is not down or up so you should avoid that kind of the market.
With buy and sell order in Forex you have other order types you can use.
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