What does ‘Buy’ in forex mean?
In forex trading, ‘Buy’ refers to the act of purchasing a particular currency pair. When a trader ‘buys’ a currency, they are essentially exchanging one currency for another, with the expectation that the value of the currency they’re buying will increase over time.
This transaction is executed at the ask price, which is the price at which the trader can purchase the base currency in the currency pair. ‘Buying’ in forex allows traders to profit from the appreciation of a currency’s value relative to another currency.
Example of ‘Buy’ in forex:
Let’s say you believe that the value of the Euro (EUR) will increase against the US Dollar (USD). In this case, you would enter a buy order on the EUR/USD currency pair. If the current exchange rate is 1.20, you would buy 1 euro for 1.20 US Dollars.
If the exchange rate rises to 1.25, you can sell the Euro back for a profit of 0.05 USD per Euro.