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Forex Trader

Forex Trader

Forex Trader
Forex Trader

What is Forex Trading?

Forex trading is one of the largest forms of financial investment in the world. The reason people join forex trading is to make a profit and as part of international trade. 

Forex is a foreign exchange or buying and selling foreign exchange that makes people get a lot of profit from the movement of foreign currency exchange rates. Forex trading is certainly done online.

Forex advantages

The value of stock trading transactions on the NYSE, Nasdaq and Tokyo combined amounts to $300 billion per day. Compared to forex per day can reach US $ 6.6 Trillion (according to Bank International Settlements). This value shows many times higher than stock transactions.

Reasons for Choosing Forex

1. Progress of Globalization

The development of globalization which is supported by advanced technology facilitates international trade transactions around the world. The existence of this globalization encourages forex trading to soar.

2. Very Liquid

It is called high volatility because the transaction value in the forex market is quite large. Generally in the forex market, there are several parties involved in trading. Among them :

Government. Foreign exchange is needed to pay debts, receive loans, and other needs.

Corporation. Generally, exports and imports by corporations require foreign exchange in their trading activities.

Investors. Buying and selling foreign exchange aims as a form of investment to seek big profits.

Usually liquid markets attract a lot of investors because they can buy and sell currencies easily.

3. Achieving Wealth

If you want to make a quick profit, apart from the stock market, of course you can try the forex market. Why? The first is leverage, where you can trade large amounts with small capital. Second, high volatility where in the forex market you get the opportunity to make a lot of profits. But remember, high risk high return yes.

4. Plenty of Time to Trade

The stock market is usually limited from 9 am to 4 pm. Saturday and Sunday off. Well, in the forex market the advantage is that trading is open 24 hours, you know and doesn't know holidays. Interesting right?

5. Trading Positions

In the stock market, the first thing you have to do is place a buy position, then second you can only place a sell position. The point is you can't sell shares if you don't own the shares. Unlike forex, you can place buy and sell positions at the same time without having to own the goods, such as stocks. Buy and sell positions in forex can certainly give you a bigger profit.

6. Only Need a Little Capital

Capital to enter the world of forex can be said to be small or relatively affordable, but has a large buying power of investment. For example, you only need $25 to make $1000 worth of forex transactions.

Forex vs Stocks

1. Parties to the Transaction

In the stock market, transactions occur centrally on the stock exchange between you, the broker, and the stock exchange. In forex, transactions are Over the Counter (OTC) between you and the broker. In the stock market transactions occur on one exchange, in forex there is no exchange party. This makes the broker's role very central.

2. Stock and Forex Positions

In stocks, the shares are kept in custody. Shares prove ownership of a company. So you can say there are items you have. In forex, of course, it's different. Profit and loss depends on your position. For example, when you close a position, you only see the price difference and pay or receive the difference.

How to Trade Forex

Open Buy

In this position you expect the value of the Euro to be stronger than the USD. For example, you buy 1.1215 (100,000 Euro) and get US$ 112,150. Then the Euro becomes 1.1315 so that the value of US $ you get becomes US $ 113,150.

From the example above, for example, you buy at 1.1215 then the EUR/USD strengthens to 1.1216 (need additional USD to buy 1 Euro). If the EUR/USD exchange rate strengthens, then realize your profit by closing the position and making a close buy. 

Open Sell

In this position, you expect the value of the Euro to weaken against the USD. From the example in number 1, for example, you buy at 1.1215 and the Eur/USD exchange rate weakens to 1.1211. This means you need less USD to buy 1 Euro. If it has weakened, you can realize the profit by closing the position and making a close sell.

In essence, you may need more knowledge to learn the world of forex and risk management. Of course, to enter the forex market, it is recommended that you use cold money. Remember all investments have risks.

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