Long position and short position in Forex

What are short and long positions?

One reason more
speculative investors are choosing to start trading Forex is that it
is possible to speculate that prices will go up as well as down. While a
classic investment is almost always only suitable for hoping for a positive
development of certain values, investors in forex trading can also benefit from
falling rates of the corresponding currency. In the following guide I would like to inform you how you can speculate on falling or rising prices and
what the so-called short and long positions are all about.

Contents:

1. Prices
   rise and fall
2. long
   positions
3. short
   positions
4. Fees
   for long & short positions
5. Build
   a long position
6. Build
   short positions
7. Conclusion

Exchange rates can rise and fall

As you know, forex
trading works by speculating that one currency will rise or fall in value
against another. As a result, forex trading is always based on the value
ratio of two currency pairs to one another, the exchange rate. So if I take for example the euro and US dollar currency pair, the value of the dollar
against the euro can rise or fall at any time. The exchange rate, which
can “run” in one direction or the other, then changes
accordingly. For example, if you decide to speculate that the dollar will
rise, you are simultaneously assuming that the euro will decrease in value
against the dollar for the currency pair mentioned above.

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US Inflation at Record Level, Gold Shoots up

The markets no longer seem convinced that the current high inflation is as “temporary” as the US Federal Reserve would like it to be. It was announced yesterday that US consumer prices rose 6.2% annualized in October – their highest level since 1990. Gold reacted promptly.

In response to the latest data, the price of gold shot up nearly $ 40, the Comex futures were meanwhile 2% up, while the stock markets fell. In early European trading, an ounce of the metal still costs around $ 1,854.

On a monthly basis, the Consumer Price Index (CPI) was up 0.9%, the largest increase in four months. Even the so-called “core CPI”, which does not include the prices for food and energy, increased by 4.6% compared to the previous year, which is the largest increase since August 1991.

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Gold: The BIG Comeback

 In the past few months the gold price has been looking for direction, now it has made a decision: it is going up again. US inflation is likely to play an important role here.

Since July there has been a stalemate on the market – the high inflation actually spoke in favor of a rising gold price, but the prospect of an imminent tightening of monetary policy on the other hand – rising interest rates increase the opportunity costs for interest-free gold.

Now the tug-of-war has been decided in favor of a rising gold price. That is quite understandable. Because the FED is rather hesitant to tighten its monetary policy, with a cautious reduction of the purchase volume of fixed-income securities by only 15 billion US dollars per month. The tapering could last until the middle of next year, and interest rate hikes will only be on the agenda after that.

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