What is Forex Trading
This section is the first and main part
that must be known.
Yes, of course! Really? want to trade
something but don't know the goods being traded?
Trading is trading, making buying, and
selling transactions.
Forex is an abbreviation of Foreign
Exchange.
Forex trading is a trade that utilizes
fluctuations in the price of one country's currency against another country's
currency to find the amount of the difference between the selling and buying
price as a profit that we get.
Currency is always traded in pairs, for
example, EURUSD (Euro currency against US Dollar), GBPUSD (British Pound
against US Dollar), etc.
Trading GBPUSD means trading the GBP
against the USD. For example, we do a Buy GBPUSD transaction, that means we buy
the GBP currency using USD (which is in the balance of our trading account),
which later this buying transaction will end by clicking the Liquidation
button, which means we sell the GBP and get USD as profit trades that we do and
will be immediately credited (if the profit is positive) or debited (if our
transaction loses) to the balance of our trading account.
Forex trading (especially in margin
trading) is also called one of the investment choices in the financial sector
which is classified as the highest risk-high return investment. This means an
investment with a very large profit opportunity can even reach hundreds to
thousands of percent per month but also presents the same risk, especially for
those who do not understand risk management.
We need to understand the concept of high
risk-high return here. All types of investments have a potential loss. The
amount of potential loss will be proportional to the amount of potential profit
that we will be able to get here. The greater the potential benefits that can
be obtained, the greater the potential losses that can arise, and vice versa.
Forex Market
Who are the business people in the forex
market? Now it is very diverse, ranging from the Central Bank of a country,
private banks, investment companies, large traders, to retail traders like us
all over the world.
Considering its wide range and diversity of
actors, the forex market looks very attractive. Why? Because it makes the forex
market the largest market even many times larger than the largest stock market
in the world, NYSE (according to Worldatlas.com data, Friday, 7/22/2016) so
that the movement of currency prices in the forex market is almost "
cannot "be intervened even by a market participant who is a country.
Remember the events of 2016 when the Central Bank of Japan intervened to weaken
its currency and only lasted a few days, then returned to follow its
strengthening trend against the USD.
In addition to the price movement, can
hardly be intervened, the forex market also becomes very liquid (when we want
to sell, at that time there is always a buyer, no need to wait as long as most
transactions on the stock market) because of its global market participants.
Unlike traditional markets, the forex
market does not have a specific physical location. the majority of transactions
are now done through electronic commerce networks. The transaction process can
occur quickly, open 24 hours nonstop for 5 days a week. With the development of
internet technology now, I can say that trading in the forex market is a dream
business of all people where we can trade whenever, wherever we want as long as
we can connect to the internet.
Purpose of Forex Trading
Market conditions and prices in the forex
market move very dynamically, can change at any time quickly in response to an
event both economic, political, war, natural disasters, etc. especially for
countries with advanced and strong economies, there is little sensitive
information then the country's currency prices can move quickly up or down
depending on the good or bad information for the country concerned.
This is what marketers (traders) see as an
opportunity to take maximum advantage of a fluctuating price movement of a
currency in a relatively short time.
Well, while we are sufficient for the
beginner article this time. It may be useful.
by: Albinus Tejo S
