Get to know Forex Basics

 Forex is currency trading that takes place outside the exchange (over the counter). Today, forex is the largest and most liquid financial market with a daily trading volume of more than 5 trillion US dollars per day. Here are some of the advantages of forex trading, including:

• Forex market opening hours last 24 hours from Monday morning to Saturday morning. So that traders can trade at any time according to their respective free time.
• There are no heavy requirements to start trading forex. Traders only need a laptop or cellphone and an internet connection. The initial capital is also very affordable, you can start with only 100 US dollars (or around Rp. 145 based on the current rupiah exchange rate).
• No one can manipulate the forex market. Even city brokers can only tinker with their own trading platform, so traders are free to compare prices with other brokers, then switch to more bona fide brokers.
• Forex trading liquidity is very high. So traders don't have to wait a long time to execute buy or sell orders.
• Forex trading fees are very low. Brokers charge three types of trading fees, namely spreads (Difference in selling or buying rates), commissions (fees per trading volume), and swaps (interest for trading positions that are left open until past midnight). But the intense competition between brokers often makes traders free one of the fees. Traders can look for commission-free brokers. Swap free broker and zero spread broker.

How the Forex Market Works

Traders in the forex market mainly trade the currencies of the world's largest countries which are most widely used in export or import transactions and cross-border money transfers. Traders all know currency rates fluctuate. Forex traders attempt to analyze the movement of currency rates in order to profit from these changes. The picture is similar to a foreign exchange exchange. When traders predict the US dollar exchange rate will strengthen against the euro, then traders will buy US dollars now. Then after the US dollar exchange rate really strengthens, traders can use the US dollar to buy euros. The difference with ordinary forex exchange, forex trading is done based on standard currency pairs. Some of the popular currency pairs include EUR/USD, GBP/USD, AUD/USD, USD/JPY, USD/CHF, USD/CAD, and NZD/USD.

So when a trader expects the US Dollar to strengthen against the Euro, the trader will sell the EUR/USD pair. Meanwhile, when a trader expects the Euro to strengthen against the US Dollar, the trader will buy the EUR/USD pair. If your prediction is correct, the difference between the selling price and the buying price of EUR/USD will be a profit for traders.

Buy and sell transactions will be carried out through a software or application that becomes a forex trading platform. In short, some of the initial capital for forex trading include a minimum of 100 USD, a laptop or cellphone, an internet connection, and the ability to analyze the market. Traders also need patience to wait for the results of your analysis to materialize and make a profit.

Forex Business Advantages and Risks

Forex Business Advantages and Risks

The profit potential of forex trading is huge. As stated above, forex business can be done anytime and anywhere as long as there is an internet connection. Professional traders can earn between 10-30 percent per month from this business. However, these advantages are not results that can be obtained instantly.

There are several forex business risks that prospective traders need to consider:

1. Exchange Rate Risk: Remember, forex trading aims to profit from changes in currency rates. If the trader's prediction about the change is correct, the trader will make a profit. But if the prediction is wrong, then of course the trader will lose.
2. Market Liquidity Risk: Not all currencies are suitable for trading all the time. The most popular currency pairs such as EUR/USD, GBP/USD, AUD/USD and USD/JPY are always busy being traded. But if you choose the wrong currency that is not popular, then the trader will have difficulty getting the selling/buying price that matches the prediction.
3. Leverage Risk: Leverage is a feature that traders can use to increase their buying power. For example, a trader has 100 USD of capital and uses 1:100 leverage, then he can buy/sell as if he had 10,000 USD. Where did this money come from? This is a feature provided by the broker based on the concept of margin trading (margin trading). This leverage feature is free and can be used by anyone. But the trader's profit and loss will be adjusted in proportion to the leverage he uses as well. So, traders need to use leverage with caution.
4. Risks of Online Transactions: Traders will trade forex via online trading platforms. Like software and mobile applications in general, the platform is also prone to errors from time to time. If you are not careful, sometimes traders can also make a typo or make the wrong order. Therefore, you should study the instructions on how to use the platform properly.
5. Forex Broker Risks: The forex market is not located in a specific location, but takes place in an international interbank system electronically. Traders need a platform from a forex broker to connect to the system. Forex brokers also provide leverage, deposit and withdrawal of trading funds, etc. So be careful in choosing, so that traders get the best and most trusted forex broker.

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