We have referred to buying and selling multiple times up to this lesson, but let’s dive into this concept a bit deeper. In lesson 9 (URL to lesson 9) we explained how buying a currency pair translated to buying the base currency while selling the quote currency, and selling a currency pair implies the opposite action. We need to understand that every operation a trader might take in the market, revolves around buying and selling. When we enter a trade that we have planned, our bias is either bullish or bearish, and therefore we are either going to buy and sell at a specific entry. In order for us to buy a financial instrument, there must be a seller providing a specified quantity of the asset we wish to buy, at a price we both agree on. It is the duty of brokers to connect buyers and sellers from all over the world at an instant. Conclusively, when we buy a currency pair another market participant is selling it to us, and the reverse is true when we sell a currency pair.
After we have entered a trade, either buying or selling a financial instrument, only one thing is certain. It is guaranteed that we will close this position at some point in the near or far future. Exiting from a trade also implies buying or selling. If we are active in a buy position, and we wish to close this trade, we need to sell the previously bought CFD (contract for difference). Selling in this scenario can be done manually from the trader himself operating on his trading platform, or automatically when price strikes the predetermined takeprofit or stoploss level.
