3. First Touch With Forex Trading

3. First Touch With Forex Trading

After reading or finding out a little about forex, may you know how big the potential profit in forex market trading. Hmm ... big enough in your mind. Big enough to fulfill all your dreams and it was worth it for the occupied.

Well, there is nothing wrong with all that knowledge. Likewise with your beautiful dreams.Everyone is entitled to have a dream to settle down and become financially independent.

But that is only sepenggalan sweet things in the world of forex. An ideal final destination.And maybe if asked further whether the forex trading, you may be confused.

"What is the same with forex money changer?"

"Or a trade like stocks?"

"From where profit can I get?"

"Is that legal?"

"Could loss"

"Or what?"

Wait ... I know you have many questions. All these questions will we answer in this website.

Well, then let's start our first introduction to forex trading.

To ease your introduction to forex, I would analogize forex trading with a money changer or stock. This is due largely to know what it was money changer or stock trading as well (if you do not know, go to a money changer and ask the clerk there Cool).

If anyone asks I am what is forex trading then the answer can be very varied. But I liked this simple definition: forex trading is an investment instrument in the form of foreign exchange trading pairs. Forex itself has several other names such as Fx, margin trading, or forex trading. It was all the less refers to forex trading.

The advantage of investing forex (forex is an abbreviation of Foreign Exchange) obtained from the difference between the purchase price and the selling price of the currency that we traded.

A simple example:

In the last month Amir buy the US dollar as much as $ 1000 by buying rate Rp.8500, - Then this month USD exchange rate strengthened to Rp 9500, - per dollar. So when Amir sell the dollar this month, he makes a profit of (9500 - 8500) x 1000 = Rp. 1.000.000, - Easy, right?

Why, then forex exactly the same as when we change money at the money changer dong?Yes indeed similar. So from the beginning was I analogikan forex trading at the money changer. Similarly it is not the same. So there is a difference. Among the methods of trade is done with the form of margin trading and there is no transfer of physical goods.

Forex trading is traded in currency pairs are commonly called pairs. For example, the USD / JPY pair, which means the exchange rate between the US Dollar and Japanese Yen. Oh yes, before I forget, there will be some of the terms or abbreviations that we will meet in the world of forex. we need to know, but do not worry, I have prepared a dictionary of terms on the other page.

Among the investment instruments on the stock exchange, forex trading is the greatest instrument kapitalnya. Large volume of trade of about US $ 2 trillion (remember, in US dollars) was approximately 46 times greater than commodity futures exchange markets (such as rubber, coffee, gold, etc.) others. Or thousands of times greater than the total transactions on the Jakarta Stock !! With a market capitalization of that, then known as forex trading the most liquid and biggest market in the world.

Only 5% of that fund which is a routine government funds. 95% belong to the investors free of many of the world. Actually the biggest and most diverse market. Another plus is that forex trading is an investment instrument that is active 24 hours a day and 5 days a week.Starting from Europe, America, Asia and Australia. So unlike the Jakarta Stock Exchange which can only trade during the day, the forex trading (especially in online forex trading) we can trade anytime and anywhere.

Not all currencies can be traded here. Only a few developed countries currency that is commonly used is USD (US Dollar), JPY (Japanese Yen), GBP (British Pound), EUR (Euro), CHF (Swiss Franc), and AUD (Australian Dollars). So if we invest in the forex trading market, then we will not find pairs of IDR (Indonesian Rupiah) for USD. That there are currency pairs that I mentioned earlier the EUR / USD, USD / JPY, CHF / USD etc.Remember our earlier definition, forex trading is the trading of foreign currency with other foreign currencies.

This is one difference with the money changer in general. If you go to money changers and exchange your rupiah to the dollar, then it means you are doing a transaction with a pair IDR / USD alias Indonesian Rupiah to US Dollar.

This never happens in forex trading. By tradition, the currency traded currency only countries that have fundamentally advanced with a large volume of exports and imports were stable.

The next feature of forex trading is that he never traded physically. Yup, never. In contrast, if you have to go to money changers and exchange your dollars, then you are required to carry in your pocket physically.

Well, forex, trading is not done physically. Recorded only evidence of any transaction and when you make a transaction. Days of yore (like a fairy tale happens J) all forex transactions are letters written beharga. Then after the phone use is widespread, evidence of reduced transaction only be a short writing course which is called quotes.From this was born the term Dealing Quotes (DQ).

Well, now that forex trading is no longer done by telephone. Already started outdated. Now its time online. All manner of transactions and evidence of the transaction was done online. You simply fill in your user id and password provided by the platform provider (in this case called a broker or a broker) and then, click ... and emerge all the details of your transaction.

Makes it easier for everyone in forex trading because then anyone can do transactions and more, the transaction is no longer limited by space and time. Due handled by the system and no longer on the phone that fact must be held by men (dealers) then the investor can invest forex whenever he wants as long as 24 hours a day with ease.

Even I know several housewives who play forex trading through his house. Internet capitalize on their home computer or laptop, then began the action they analyze the movement of nutrients. Mothers know ... So if you and I are already working and being an office employee does not know the forex, shame ah dong at this modern mothers, he he he ..

Ok, this last discussion about First Touch With Forex Trading us. One of the most prominent part in the forex world is a model of trade is done with the margin trading system. Margin trading is a trading system using only the only guarantee in the trade (margin = guarantee).

This is different from the trading system by methods spot that we used to do everyday.That Spot was trading with a system of exchange.

The more confused? Ok, then let's see a real picture in the world foreign exchange daily.Back My match foreign exchange trading through a money changer with forex trading.Again, money changer ... pity it seems like a money changer. We wish all readers no open businesses in the world money changer. If you can not complain I hit. Vilify business people

Let me give you a simple but real picture. I take the example pair (pair) GBPUSD currency. This means that the British pound sterling currency paired with the US Dollar.

At the time this article was made, the exchange rate was at 1.9650 GBPUSD. That means that 1 British pound was equal to US $ 1.9650. Typically, these currency movements more or less experiencing the movement of 100 points per day. So, let's say tomorrow GBPUSD exchange rate to 1.9750. Do you know how much profit if you trade with and without margin trading?

Now let us discuss them one by one. The first without the use of margin trading system or Spot trading.

Because we know that prices will move higher, so to make a profit is by buying. Buy cheap and sell expensive.

Spot Trading Example

Say the fund you buy as much as 100 pounds for a profit. Then the amount of profit is (1.9750 - 1.9650) x 100 pounds = 0:01 x 100 = 1 pound sterling. Ehmm small yes ... why?Yes indeed small, wong currency movement is not very large so per day. If ya do not want a big profit with a capital Cuma 100 pounds. How about 10,000 pounds. Well it means that we can gain 100 pounds sterling with the same movement as the previous example.

Now this feels. Fortunately 100 pounds, or if dirupiahkan ya around Rp 1,500,000 (1 pound = Rp 15,000).

LHA yes, fortunately indeed great, Rp 1.5 million. But the capital that you know, 10,000 pounds! Approximately yes Rp 150 million to Rp 1.5 million profit. One day only 1% profit!Seriously. Better I use the money I was to buy a dream home, or at least a car on the main currency of this model!

Ha..ha..ha ... Yes that trade with the model Spot. It's called an exchange trading system one. That is to earn as much as 10,000 pounds you are obliged to spend money just as much as well. Not effective when viewed from the side of capital and profits. That's why you rarely find those who invest in foreign exchange by trading spot unless it involves a very large fund.

In addition to the profits calculation perseng did not hit, judging from the capital side also requires funding not less.

Example Calculation of Margin Trading

Well, margin trading eliminates this problem by using a security model. The same case and indeed the solution more or less the same. It takes 10,000 pounds if you want a profit in sufficient quantities.

But until there alone, with margin trading, you do not need to spend 10,000 pounds to buy 10,000 pounds. That is, you just simply remove the guarantee only. How big? Once upon a time it takes a deposit of 10% to get the whole section. That is if you want to buy as much as 10,000 pounds, you simply remove the Pound in 1000 alone. Yes at least been reduced considerably compared to the original.

But still great. 1000 Pound means is Rp 15 million.

Finally a great back guarantee was reduced to 5%. And finally after a request here and there, now most companies forex trading provider guarantees that are small enough to be able to take action to buy or sell. Only 1% or sometimes referred to 1: 100 (this is called leverage ratio / leverage)!

That means if you want to buy as much as 10,000 pounds, you simply remove only as much as 100 pounds or approximately USD 1.5 million. Much cheaper is not it?

Gains derived by any fixed amount: 100 pounds or USD 1.5 million. Wow, with a capital of USD 1.5 million we could get a profit of Rp 1.5 million in one day. That means profit reached 100% in 1 day! Absolutely incredible.

Well that excess margin trading. Something impossible by conventional trafficking. But wait ... What brokers do not lose 10,000 pounds handed to us while we just simply spend USD 1.5 Million? Not at all. Recall the discussion above, forex trading is not done physically. This means that Broker does not need to hand over the money as much as 10,000 pounds to the buyer because all these transactions are not carried out physically.So, margin trading solved the unbalance profit loss percentage.

Oke. Margin trading became a god helper in our session this time. Later we will learn together that turned out margin trading was actually a double-edged swords are as sharp.The logic is that margin trading can magnify your profits, then the margin trading can also magnify your losses. We see alone. But this time the session until here.