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Investment is one of the financial steps that a person can take to get a profit (return) in the future.

There are several types of investments that can be made, ranging from saving, deposits, mutual funds, stock markets, crypto assets to buying other assets that have the potential to have added value in the future.

In addition to the types of investments that have been mentioned, there are other ways that you can do to get profits, namely buying and selling activities in the financial market or commonly called trading. To trade, you can take advantage of stock market instruments, crypto assets, and foreign exchange (forex).

All types of activity in the financial markets are basically good. The most important thing is to understand your personal risk profile and the financial goals you want to achieve in the future before engaging in these activities.

Of the several financial instruments that have been mentioned, it turns out that there are still many people who do not know about forex. In Indonesia, forex is known as foreign exchange (forex).

As the name implies, forex or foreign exchange is a foreign currency exchange transaction.

Globally, the volume of forex transactions is greater than that of stock trading. This is because many people have to carry out various transaction needs, such as debt payments, exports, imports, and travel abroad.

In addition to these needs, forex is also a traded asset. Forex trading, as this activity is called, has high volatility due to rapid price fluctuations. Thus, this instrument has a high rate of return on profits and a high risk of loss as well.

Before trading, it's a good idea to know the basic terms used in forex transactions, such as type of transaction, leverage, margin, lots, balance, pip, and price movement trends (bullish, bearish, and sideways). Check out the reviews.

1. Type of transaction 

To trade, you must understand the various types of forex transactions. There are several types of transactions provided, including spot forex, forward transactions, swap transactions, options transactions, and futures transactions.

Especially the latter, nowadays, many brokers provide futures transaction facilities for forex trading. Broadly speaking, futures transactions or futures contracts require traders to buy or sell a number of underlying assets at a certain price and time in the future.

The price at a certain position is called the futures price. Meanwhile, the price of the underlying asset at the date of delivery is referred to as the settlement price.

Then, the future date is referred to as the delivery date or final settlement date.

2. Leverage

Leverage is a loan facility provided by a broker or broker to a trader. Its function is to increase the purchasing power or the trader's capital in a certain proportion. The amount of leverage starts from 1:20, 1:50, 1:100, 1:1,000, and so on.

For example, you have a capital of Rp. 1 million. When using the 1:100 leverage facility, you have the ability to buy 100 times more than your capital. So, you can make transactions up to IDR 100 million.

3. Margin

To perform leverage, traders usually have to provide a certain amount of money as collateral for transactions. An easy example, if you want to use the 1:100 leverage facility, you are required to have a margin of 1 percent.

In other words, you as a trader must provide capital of at least 1 percent of the value of the funds you want to trade.

If the trader is unable or fails to provide the minimum amount of funds, his trading account will be in a margin call position. During a margin call, all trading positions are open and the account will be closed automatically by the system.

4. Lot dan pip

Usually, some people are familiar with the term lot from the stock market. Despite having the same name, lots in the stock market and forex have different transaction volumes.

In the stock market, 1 lot is equal to 100 shares of a company. Meanwhile, 1 standard lot on forex represents 100,000 contract sizes. There is also 1 mini lot or 0.1 standard lot representing 10,000 contract sizes.

If you already understand the term lot, you must also know the meaning of pip. Pip or points is the smallest unit of price change in forex. Generally, pips are calculated from the four digits after the comma. For example, if the EUR/USD currency pair you are investing in falls from 1.1645 to 1.1635, there is a 10 pips decrease.

5. Trends in price movements

As already mentioned, forex trading has high volatility. Trends in price movements also change rapidly. To make it easier for traders to make transactions, there are certain terms that describe a trend of price movements.

There are three main terms that are often used, namely bullish, bearish, and sideways. Bullish is a trend of price movements that tend to rise or uptrend. While bearish is the opposite or downtrend. Meanwhile, sideways is a stable or flat movement trend. Those are some terms that you must know if you want to try forex trading. After knowing these terms, your next step is to prepare cold money specifically for forex trading.

In addition, you can also learn more about forex as well as choose a trusted broker to trade with. Choose a broker that is legal and has obtained permission from the Commodity Futures Trading Regulatory Agency (CoFTRA) and has a separate customer fund account, such as MIFX Indonesia from PT Monex Investindo Futures.

In addition, MIFX Indonesia also provides comprehensive education for novice traders who want to learn more about forex through the MIFX Academy. Forex educational materials are presented in the form of fun bite-size animated videos that can be accessed for free. Thus, prospective traders can easily understand the material and are ready to become a reliable trader.

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