How does foreign exchange trading operate?

Query by The_Reporter: How does forex work?
I have study all the information I could get my hands on, and I still do not realize. I believe its because I’m generating assumptions from preconcieved notions.

Like, lets say the currency is USD/JPY = 91.003. Does that suggest if I acquire, I’m paying yen to get dollars? Where the hell did I get these yen? And if I sell, does that mean I’m spending my bucks to get yen? So now I have yen in currency in my bank?

Also, the rates fluctuate so significantly. In actual lifestyle, how do they trade? I indicate, lets say I have a revenue of 5000$ . By the time I phone my broker, the rates could have shifted and now I have a deficit. How does that work?

Very best response:

Answer by Out of Sight Out of Thoughts
If you acquire USD/JPY, then you are buying USD whilst simultaneously promoting JPY. You are basicly telling banking institutions to convert the worldwide money provide from Yen to USD, for even so significantly your transaction is really worth. In addition, your revenue/reduction is recognized right after the transaction is completed. So if you bought USD/Yen, you have to promote it back to comprehensive the transaction.

What do you believe? Solution beneath!

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