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For example I have 10'000 € account balance in my forex trader platform. I want to buy dollars vs. yen. that is USD/JPY pair.

according to some logic in order to buy dollars (USD/JPY) I need yen right? so upon taking long position to buy USD/JPY my account balance which is in euros will be charged to buy yen first then those yens will be used to buy dollars? Is that correct?

OR, is my Euro acc. balance charged directly to buy dollars without purchasing yen first?

which one of these two statements is true and why the other statement is false if so?

EDIT: also the same case as above, let say I want to buy yen against the dollar instead (vice-versa), then I suppose procedure will be to (automatically)buy dollars first and then buy yen in order for position to be open, right?

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    Why not ask this question to the forex trader platform that you are using? They can tell you exactly which scenario they will apply. Anything that people can tell you here would be mere guesswork. Dec 26, 2014 at 14:35
  • @DilipSarwate, Thank you, I don't think cross currency trading depends on broker rules. I asked this question on many sites and got only 1 answer that explained how this works. 99% of online forex traders don't how this works and that's sad fact.
    – codekiddy
    Dec 26, 2014 at 20:04
  • "99% of online forex traders don't how this works and that's sad fact." Don't ask your buddies or fellow-traders or random sites how it all works; ask your own forex trader platform where you have an account. If they cannot tell you which rule they will apply, consider switching to a different platform or another line of work. Dec 27, 2014 at 22:55

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Here is one forum discussion (which I started in same time) that answers this question if anyone is interested.

LINK

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