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How does short selling with Forex work?

Short selling with Forex (foreign exchange) is a way for investors to profit from falling prices in a currency pair. In short selling, an investor borrows a currency from another investor and sells it on the market, hoping to buy it back at a lower price in the future and return it to the lender. With Forex, investors can short sell without actually borrowing the underlying currency. Instead, they enter into a contract with a broker to exchange one currency for another at a future date and receive the difference in value between the two currencies. If the value of the currency falls, the investor can make a profit by buying it back at a lower price and returning it to the broker. However, if the value of the currency rises, the investor may incur a loss.

“If you understand how the economy works, it works just like a machine. There are cause-effect relationships.” – Ray Dalio

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