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What do I lose trading in the Forex market?

Hi there. Recently, I became quite interested in trading in the Forex market, but I feel like I need to learn some basics first. Can you, please, explain to me how do you lose money in the Forex market? I don’t quite understand the concept. Thanks in advance!

Hi, Tiffany! In the forex market, you are trading currency pairs. One currency is always quoted against another currency. For instance, USD against Euro. When a trader buys the dollar against Euro, he or she is hoping or speculating that the dollar will increase in value, while Euro will decrease. Conversely, when the trader sells the U.S. Dollar against Euro, he is speculating that the dollar will decrease in value while Euro increases in value.

There is a specific strategy used to minimize losses in case if your trade goes wrong. A trader can decide how much of a loss to sustain before exiting the position. This type of order is called stop-loss order.

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