Here's the beautiful part of forex: you can make money when prices go up and when they go down.
Going long (buying)
You buy a pair because you think the first currency will get stronger. Buy EUR/USD at 1.0800, sell at 1.0900, keep the difference.
Going short (selling)
You sell a pair because you think the first currency will get weaker. Sell GBP/USD at 1.2700, buy it back at 1.2600, pocket the drop. You don't need to own pounds first; your broker handles that behind the scenes.
Shorting feels weird at first. Think of it as "selling something you'll buy back cheaper later". Like pre-selling concert tickets you know will drop in price. Totally legal in forex!
So where does the money come from?
Price moves are measured in pips (next lessons). How much each pip is worth depends on your position size. Bigger position, bigger money per pip, both ways.
You buy EUR/USD at 1.1000 with a position worth $10 per pip. It rises to 1.1050: that's +50 pips × $10 = +$500. If it falls to 1.0950 instead: −50 pips × $10 = −$500.
Thinking "I'll just hold until it comes back." Sometimes it doesn't. Every trade needs an exit plan for when you're wrong, decided before you enter.
- Long = buy, expecting a rise. Short = sell, expecting a fall.
- Profit or loss = pips moved × value per pip.
- The same leverage that grows wins grows losses too.