In the Loan and Credit market, money is earned either by increasing the price of the currency bought or by decreasing the exchange rate of the currency sold.
In practice, it doesn’t matter if you buy (long position) euro (for EUR / USD pair) or sell USD (short position). If you think the economic situation will lower the dollar exchange rate,
Then the upcoming data will support the euro exchange rate
You can choose EUR as the transaction medium as it has high liquidity, but you can as well show your negative view of USD by purchasing (for example) NZD / USD. By definition, this means you are selling USD.
Money is earned in the Loan and Credit market by bought currency going up or by sold currency going down.
Listing transactions on the currency market is easy. The trading mechanism is very similar to those found in other financial markets (e.g. the stock market), so if you have any investment experience you should be able to understand it quickly.
The purpose of Loan and Credit trading is to exchange one currency for another in the hope that the price will change. More specifically, the currency you buy will increase in value compared to the one you sold.
Example: The USD / CHF exchange rate indicates how many US dollars one Swiss franc can buy or how many Swiss francs you need to buy one US dollar.
EUR 10,000 x 1.18 = US $ 11,800
EUR 10,000 x 1.25 = US $ 12,500
Earning on long position / short position
At the beginning you should specify whether you want to buy or sell. If you want to buy (which actually means buying the base currency and selling the quote currency) you want the base currency to increase, then you would sell it for a higher price.
In conversations with traders, this is called “opening a long position” or “long position”. Remember: long = buy.
If you want to sell (which really means you are selling the base currency and buying the quote currency) it’s because you want the base currency to lose value and then you would buy it back at a lower price.
This is called “opening a short position” or “short position”. Remember: short = sale.
Bid, Ask and Spread rates
All Loan and Credit quotes are quoted based on two prices: bid and ask.
In general, the bid is lower than the ask price.
” Bid ” is the price at which your broker is willing to buy the base currency in exchange for the quote currency. This means that “bid” is the best available price at which you (the trader) will sell to the market. If you want to sell something, the broker will buy it from you at this price.
“Ask” is the price at which your broker to sell the base currency in exchange for the quote currency. This means that the price “Ask” is the best available price at which you will buy on the market. If you want to buy something, the broker will sell it (or offer it) to you at the “ask” price.
The difference between the bid price and the ask price is called “Spread”
For the EUR / USD quotation given above, the purchase price is 1.34568 and the selling price is 1.34588.
If you decide to sell EUR, click “Sell” and you will sell EUR at the price of 1.34568. If you want to buy EUR, click “Buy” and you will buy EUR at the price of 1.34588.