Short Selling Forex

[belhaj2010]

I understood shorting forex, only I could not figure out is there a borrowing of one currency when make short of a pair i.e. like in stocks, or there is no borrowing. Please help.

 

[gc1]

The effect is the same as if there was borrowing - in terms of calculating daily swap rate costs if the position is held past a set time of the day (often 5pm NY time) - but certainly for retail forex no real borrowing actually takes place.

 

[belhaj2010]

Thanks.What does it mean when I buy a currency I sell the other

 

[mb325]

http://www.babypips.com/school/the_skinny_on_forex.html

 

[TAjammy]

if you go long a pair you are buying the base and selling the other and vice versa

 

[Pippy5000]

Essentially, if you short -100,000 EUR/USD you are telling the counterparty that you will provide them with 100,000 Euros.. just not yet. The counterparty in effect is telling you that Euros will increase in value vs. the USD and you are saying the opposite..

You are neither buying nor selling Euros, you are entering into an agreement to sell Euros in exchange for USD only at a later time. You can do this voluntarily when the trade goes against you, or goes in your favor, or involuntarily when you run out of margin..

You will eventually provide the counterparty with 100,000 Euros in exchange for USD

Unlimited shorting is one of the main attractions to FX trading.