I'm trying to learn forex trade. Though I have done a lot of research and read many guides, I'm still quite confused.
In particular I need help on the following questions.
First let's say my account currency is USD
Consider the pair EUR/USD, 1.3000/1.3001
- If I buy 1,000 unit of this pair, does that mean my account balance will be deducted by 1300.1 USD and I get 1000EUR? Am I really selling sth and buying sth just like what I do with a bank teller?
- If I sell 1,000 unit of this pair, what will happen then? I will be taken some USD from my account balance? But I don't have any EUR, how can I "sell" it?
- If I open a position by buying EUR, do I have to close that position by selling same unit of this pair later?
- I am told that with Interactive Brokers, I can easily exchange my usd to cad at the market price with a low fee, as shown in http://blog.plsoucy.com/2013/03/converting-usd-cad-interactive-brokers-howto/. Why? Is this the same thing as "selling a usd/cad pair"? If yes, then why many people are using money transfer service (e.g. transferwise) which costs a lot more?
- I have read a guide book saying "actually nothing is sold or bought in the background, the only thing you do is to tell others your intention to buy/sell a currency pair". What does this mean?