When to buy or sell a pair

So we have learnt how to read the forex quotes if you haven’t refer back to the previous article MORE ON FOREX QUOTES. You should now be able to read the quotes so as to be able to move to knowing when buy and when to sell a pair so to make that almighty profit, the pot of gold at the end of the rainbow.

In the examples to come, we are going to use fundamental analysis to help us decide or show us whether to buy or sell a specific currency pair.
Disclaimer if you used to doze off during your economics class or just straight out ditched economics class, don’t fret! Fundamental analysis will be covered in a later post
At this moment, try to pretend or fake that you know what’s going on… i.e. fake it till you make it.
USD/JPY
Here the U.S. dollar is the base currency and as such the “basis” for the buy/sell.
If you think that the Japanese government is going to weaken the yen for its export industry, you would decide on a BUY USD/JPY order. As such you  will have bought U.S dollars in expectation that it will rise versus the Japanese yen.
If you believe that Japanese investors are withdrawing their money out of U.S. financial markets and converting all their U.S. dollars back to yen, and this will lower the U.S. dollar, you would decide on a SELL USD/JPY order. As such you have sold U.S dollars in the expectation that they will depreciate against the Japanese yen.
EUR/USD
Here the euro is the base currency and thus the “basis” for the buy/sell.
If you think that the U.S. economy will continue to weaken, which is negative for the U.S. dollar, you would decide on a BUY EUR/USD order. As such, you have bought euros in the expectation that they will rise versus the U.S. dollar.
If you think that the U.S. economy is strong and the euro will weaken against the U.S. dollar you would execute a SELL EUR/USD order. As such you have sold euros in the expectation that they will fall versus the US dollar.
GBP/USD
Here  the pound is the base currency and thus the “basis” for the buy/sell.
If you decide the British economy will continue to do better than the U.S. in terms of economic growth, you would decide on a BUY GBP/USD order. As such you have bought pounds in the expectation that they will rise versus the U.S. dollar.
If you think the British’s economy is slowing while the United States’ economy remains strong like Jack Bauer, you would decide on a SELL GBP/USD order. As such you have sold pounds in the expectation that they will depreciate against the U.S. dollar.
USD/CHF
Here the U.S. dollar is the base currency and thus the “basis” for the buy/sell.
If you believe the Swiss franc is overvalued, you would decide on a BUY USD/CHF order. Meaningyou have bought U.S. dollars in the expectation that they will appreciate versus the Swiss Franc.
If you think that the U.S. housing market weakness will lower future economic growth, which will lower the dollar, you would decide on a SELL USD/CHF order. Meaning you have sold U.S. dollars in the expectation that they will depreciate against the Swiss franc.
Lets move to WHAT IS A PIP…

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