Buying foreign exchange currency pairs is not only fun, but it can give you something to talk about around the water cooler. "I just went long on the cable during the London session this morning." Bet you'll sound a lot cooler during the morning chit chat with that. Not only that, but you might not have to engage in water cooler conversations anymore if you get it right, because you'll be making so much money that you won't have to go to work. This process gives you the opportunity to profit from changes in exchange rate between two currencies. Find out how a buy order works in the Forex market.
Buy Order Basics
So what exactly does it mean when you play say "Buy Order?" Does it mean that you are buying both currencies in the currency pair? Absolutely not! When you place a buy order on a currency pair, it means that you are buying the first currency in the pair and selling the second one.
Every time you place an order in the Forex market, you are simultaneously buying one currency and selling another. A buy order simply means that you are buying the first one in the pair.
For example, let's say that you place a buy order on the EUR/USD pair. It means that you're buying the Euro and selling the Dollar. If the Euro appreciates in value as compared with the US Dollar, you are making money.
Placing an Order
When you are ready to place a buy order, you'll need to login to your Forex trading platform. Forex brokers will give you access to an online platform or one that you can download to your computer. Once it's installed and ready to trade, you can place a buy order in one of a few different ways.
If you're using the Metatrader platform, you can go up to the top and click on the "+" sign to place an order. You can also open a chart and then right-click anywhere inside it. Once you do that, you can navigate to the order section of the menu that appears.
When trading in the market, you will need to take into consideration the foreign exchange spreads that are offered by your broker. When you make a buy order, the broker will be compensated with the difference between the bid and the ask prices that are being quoted. This amount can cut into your profitability and you'll need to monitor it while trading.