Many people say that they can get rich quickly when trading forex. However, the tempting lure is not necessarily accompanied by an understanding of what forex trading is, both its characteristics, advantages, and risks. In this review, we will discuss a number of basic forex trading that everyone must know.
A. The Meaning of Forex Trading
Forex trading is trading currencies from different countries in order to make a profit. In this case, forex is short for Foreign Exchange (foreign exchange). An example of forex trading is buying Euros (Europe’s main currency), while simultaneously selling USD (American currency), can be shortened to EUR / USD.
In the shadow of ordinary people, the notion of forex trading is the act of exchanging money in Money Changer, which is selling and buying foreign currency manually which is done through a money changer. In fact, forex trading is different from manual transactions like in Money Changer.
Generally, one’s goal to buy and sell money in Money Changer is because of the need to exchange currencies for transactions in different countries, so there is a physical exchange of money. While forex trading is done online with the aim of gaining profit only. It must be understood, forex trading is a business activity, investment, and can even be a profession.
On an international scale, foreign exchange trading (forex) is carried out by various parties, ranging from governments, central banks, multinational companies, to certain individuals who have large amounts of assets (Big Player). The transaction of buying and selling currencies between various parties does not occur in a market with physical buildings, but in an invisible network called the “forex market”.
Along with the development of technology, forex trading reaches a wider scope. Through the internet, forex trading can now be done by anyone, anytime, anywhere. Now, everyone can trade forex. You and I can trade forex online easily and with capital as small as 10 dollars.
B. Forex Market
The forex market is different from traditional markets. Because the traded here is the currency, the market (where traders/market participants sell) is not in the form of a particular building, and every market participant can play a dual role as a seller as well as a buyer. Who are these forex market participants? very diverse: it can be multinational banks, central banks, large companies, governments of any country, financial institutions, speculators, etc.
Given the global scope and actors, the forex market is very attractive and profitable. It’s so global, the forex market is the biggest cash market (reaching $ 4 Trillion per day), and is very liquid (can sell and buy at market prices, whatever the amount). The forex market is also open 24 hours non-stop, starting from Monday to Friday. So, we can trade anytime according to our free time.
- Australian Market (Sydney) at 05.00 – 14.00 WIB.
- Then to the Asian market (Tokyo), namely Japan, Hong Kong & Singapore at 07.00-16.00 WIB.
- Then to the European market, namely Germany and England (London) at 13.00 – 22.00 WIB.
- American Market (New York) at 8:00 a.m. – 05:00 p.m. (tomorrow).
Wherever you are, buying and selling can still be done because the forex market does not have a specific physical location, and transactions can be done online through the forex trading platform. The platform can be in the form of software for PCs, browser-based web applications, or mobile applications. Thus, forex trading activities can be done anywhere and anytime.
C. Forex Trading Opportunities
Simply stated, the purpose of forex trading is to gain profit from rising and falling currency exchange rates. This can be achieved because conditions and prices in the forex market move very dynamically, can change at any time quickly respond to events both economic, political, war, disaster, etc.
Even for regions with advanced and strong economies such as the US, UK, Euro Zone, or Japan; there is little sensitive information, so the price of the currency can move up and down. This is what traders see as an opportunity and opportunity to make a profit.
Online Forex trading with the aim of making profits like that is done through the mediation of a forex broker. The capital needed is very affordable; can start from just $ 10, or even free using bonus funds provided by brokers.
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D. Forex Trading Risks
Apart from the various advantages, forex trading can be likened to a double-edged sword. Forex trading can make us rich, but it can also instantly erode our capital. No matter whether you consider forex as one type of investment or as ordinary trading, the risk of forex trading is high.
The biggest risk comes from price movements themselves. If you can analyze market conditions and make transaction arrangements correctly, then profits can be obtained. However, what if your analysis is wrong? To overcome the emergence of unwanted losses, everyone who will be involved in the forex world must clearly understand three things first:
- Steps to Learning Forex Trading
- Types of Forex Trading Risks
- Types of Forex Analysis
Forex trading can quickly make you rich or poor. Because of this great risk, you must be wise and truly understand forex completely before deciding to jump into it.
Interested in starting forex trading? if so, prepare yourself to know about forex trading deeper so that you can overcome the emergence of unwanted big losses. Thank you for visiting see you in the next post.