When we trade in the foreign exchange market, we buy one currency and sell another currency. That is why foreign exchange transactions are "currency pairs". As an intuitive example, we can refer to the following image.
If we buy a currency pair, such as EUR / USD, we will buy euros and sell US dollars. We do this when we believe that the euro / dollar exchange rate will rise and allow us to sell the euro at some point in the future.
But in the foreign exchange market, we can also trade in another direction. Therefore, we can sell euros / dollars, effectively sell euros and buy dollars. With this deal, we hope the euro / dollar exchange rate will fall so that we can buy back the euro with less dollars than we sold.
What are we doing for forex market?
Therefore, we not only have a low buy high sell target, we can also choose to sell high, and then buy low. Short selling is not limited. We don't need to have euro before selling euro / dollar. This is what people call the "two-way market".
Currency exchange rates fluctuate 24 hours a day for many reasons.
