The second currency (USD) is what you use to settle the bill.If you think the Euro will get stronger or the Dollar will get weaker, you Buy (Go Long). If you think the opposite, you Sell (Go Short). 2. The Psychology of the Trade
usually happens when a country raises interest rates (attracting investors) or shows strong GDP growth. buying versus selling currency
often occurs during political instability, "safe haven" flows (selling risky currencies to buy Gold or USD), or when a central bank prints more money (inflation). The second currency (USD) is what you use to settle the bill
Are you looking to understand a specific right now, or should we look at how interest rates affect these decisions? The Psychology of the Trade usually happens when
This is an act of faith . You are betting on the growth, stability, or rising interest rates of a specific nation’s economy. You want to hold that "asset" because you believe its value will appreciate.
The price at which the market will sell to you (always higher).The gap between them is the "Spread." This is the friction of the market—the "tax" you pay to the house for the privilege of trading. 4. The Macro View