Buying and selling currency in forex follows a consistent practical process, regardless of which pair or broker platform you use. FXM680 walks through each step involved, building on the trade mechanics covered in FXM680’s guide on what a forex trade is.
Table of Contents
Step 1: Choose Your Pair and Direction
Start by selecting a currency pair, using the criteria covered in FXM680’s guide on the currency pair selection guide, and decide whether you expect the price to rise or fall.
Buying means you expect the first currency in the pair to strengthen against the second, while selling reflects the opposite expectation.
Step 2: Decide on Position Size
Determine how much capital to commit to the trade, factoring in your available account balance and how much risk you are comfortable taking on this specific position.
Position size directly affects how much any given price movement translates into actual profit or loss.
Step 3: Place the Order
Submit your order through your broker’s trading platform, choosing between an immediate market order or a pending order that triggers once a specific price is reached.
Confirm the order details carefully before submitting, since the direction and size selected here define the entire trade.
Step 4: Monitor and Manage the Position
Once open, the position’s value fluctuates in real time with the pair’s live price, so many traders set stop-loss and take-profit levels to manage this automatically.
Regularly reviewing open positions, especially around major news events, helps avoid being caught off guard by sudden price swings.
Step 5: Close the Trade
Close the position manually whenever you choose, or let a pre-set order close it automatically once your target price or stop-loss level is reached.
Closing finalizes the profit or loss based on the difference between your entry and exit prices, multiplied by your position size.
| Step | Key Decision |
|---|---|
| 1. Choose pair and direction | Buy or sell based on expected price movement |
| 2. Decide position size | How much capital and risk to commit |
| 3. Place the order | Market order or pending order |
| 4. Monitor the position | Track live price and manage risk |
| 5. Close the trade | Manual exit or automatic order trigger |
Frequently Asked Questions
Do I need to watch my trade constantly after opening it?
Not necessarily, especially if you set stop-loss and take-profit levels in advance to manage the position automatically.
What’s the difference between a market order and a pending order?
A market order executes immediately at the current price, while a pending order only triggers once a specific price level is reached.
Can I change my position size after opening a trade?
Many platforms allow adding to or partially closing a position, though this varies by broker and should be understood before trading.
Disclaimer: The content provided on this page is for informational and educational purposes only. Trading financial markets involves significant risk. Consult with a certified financial advisor before making any investment decisions.
Forex Academy
Continue Your Forex Learning Journey with FXM680
Now that you understand the trading process, the next step is learning the difference between long and short positions. Continue exploring the Forex Academy to keep learning.