Beginner’s Guide to Currency Shorting go long when they anticipate a rise in the price of a currency, and short when they expect a decline. When trading forex, you buy and sell currency pairs in pairs. The base currency is the first currency in a pair, and the quote currency is the second. For example, EUR/USD is a pair where the euro is the base currency and the USD is the quote currency. When you go short on this pair, you are betting that the euro will depreciate against the dollar.

Beginner’s Guide to Currency Shorting: Simplified for UK Traders

The process of shorting a currency involves selecting a pair, performing research and analysis, and opening a sell position through your broker’s platform. Then you wait for the currency to decrease in value, which can be influenced by factors such as political instability, economic downturns, interest rate cuts, and more. As the value of the currency falls, you close the trade by re-purchasing it at a lower price and realise your profit. To manage risk, traders use tools like stops and trailing stops, which adjust automatically as the market moves to help protect profits. It is also important to remember that leverage amplify both your profits and your losses, so it is essential to have sound risk management practices in place, especially when trading with short positions.