Intro to Forex - Do you already know what it is Forex? For the preliminary study for beginners, we will
discuss to learn recognize about Forex. What exactly the Forex? Forex stands
for "Foreign Exchange" or
called a foreign currency exchange. The term generally is a foreign exchange
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| About Forex introduction for beginners |
Discussing about the Forex means discuss the value of a
currency against another currency. The currency's value compared with other
currencies, and then forming a "foreign currency or exchange rate".
example exchange rate dollar American (USD) with the Indonesian currency the
rupiah (IDR). value comparison USD with IDR the value of the it is known as the
term "dollar against the rupiah exchange rate". If you look at the
bank or money changer, or if you also look at the development of foreign
exchange in the newspaper or on television, the rupiah exchange rate against
the dollar often write symbols in USD or IDR.
You certainly have known that in the last 10 years. For
the development of the trade forex (forex trading) in the State of Indonesia is
also very fast, most people already know about forex or even already directly
involved in the trade the forex.It was quite reasonable considering the
opportunities to be had in a trading very large forex. The magnitude of the
opportunities of is because the money market is the largest market financially in the world . Given all
economic activity in the world it is definitely geared to the currency. Daily
volume of more than 3 trillion dollars per day. Money market will remain always
running for the people still carry out economic activities. If you transactions
forex (trading forex) way online, you can conduct such transactions that you
want for 24 hours a day and 5 days a week (Monday to Friday).
Comparison
of the New York Stock Exchange Versus Forex
Below is a picture chart of the Comparison of between the
average daily volume in the money market with an average volume of transactions
happening in the stock exchanges of New York Stock Exchange. If you look at the
graph below, you can clearly see that the volume of average daily transactions
in the money market is almost 8 times greater than that took place in New York
Stock Exchange (NYSE).
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New York Stock Exchange Vs Forex
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How
to Purchase in Forex (Forex Trading)
Have you ever swap rupiah (IDR) to dollars American
(USD)? Or do you ever exchange USD to EUR (euro)? Well if you've ever exchange
money, you actually being involved in the money market, actions such as
"swap" IDR to USD or USD to EUR is a transaction Forex (Forex
trading). At that time you're buying and selling foreign currency, when you
exchange IDR to USD, basically you're against selling IDR at the same time: buy
USD.
You can conduct such transactions through banks or money
changer. You just go to the bank or money changer and then conduct foreign
exchange transactions (forex). Or you can also directly call the bank's
treasury office you trust, and then conduct the transaction. This way is the
way of conventional transactions.
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| How to Purchase in Forex |
As the development of technology today, you can now
easily to conduct online transactions. You do not need to come or go anywhere
for transactions (forex trading). You quite at home or at any place you want,
the important thing is that you have a computer or laptop, and internet. You
can trade from a chair or couch comfortable or from the top of your bed and
accompany a cup of warm coffee.
There is little difference between the forex trading
through an online broker with forex (foreign exchange) that might be able to do
most of the people in the bank or money changer. Almost all online brokers have
facilitated foreign exchange transactions, namely the system of contracts and
margin. Here are some points related to online trading by using a system
margin.
1. Object trade
In this case, the object of trade is still the same,
namely money. But here you transacted is a contract based on the value of the
currency It probably rather difficult to understand, you do not have to be
confused, there will be an explanation about this, let's say in a certain
currency transactions as if you buy a "stock" in certain countries.
in motion the value of the currency in the country, which is a picture of
market sentiment over the economy in the country. there are some currencies that
can be called "major currency". Which is the currency of the
countries that advanced and transacted with the extensive namely in the world
financial markets (forex). Below is a table of currencies including the
"major currency”.
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| Table currency |
Internationally, the currency symbol consisting of three
letters. 2 letter first is the identity of the country of origin of the
currency. and three letters are the initials of the name of its currency.
Example: USD with 2 first letter (US) the which is the
initials of the name of the State in the United States or be known American.
Then CHIF currency symbol Swiss franc . (CH) the which is the initials of
Confoederatio Helvetica is the Latin name of the Swiss Confederation, while the
letter (F) is the initials of its currency franc.
2. Leverage and Contract Size
On the online forex broker to implement the leverage in
doing Forex trading. With the of funds
leverage, a relatively small fund can be able to do transactions with a
contract value which is much larger, it is caused due to leverage services, it
may be easier we analogy with a car jack. With the car jack, you only need a
little bit of your energy to be able to lift the car body that may weigh
hundreds of kilograms, that's the workings of such leverage.
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| Leverage and Contract Size |
In the forex broker applying leverage of 1: 100, then you
just need a fund of money of 1,000 dollars, to do a transaction valued at $
100,000. Money with the amount of $ 1,000 dollar called the margin, and while
the value of transactions amounting to 100,000 dollars called the
"Contract Size" which means capital you need only 1 percent.
As for those of you who do conventional foreign exchange
transactions, examples you perform money transactions amounting to 100,000
dollars, then you must also provide funds money worth 100.000 dollars as well,
which means you need capital at 100 percent.
3. Direction Transactions
Or in the call with "two-way opportunity" which
means you are looking at the profit opportunities when the market is up and
down. There are two types of transactions such as Buy and Sell, transactions
Buy can be called with a LONG, and
whereas Sell can be called with a SHORT. If prices are rising, then the transaction
Buy (LONG) you can do with looking for a profit, and vice versa when prices are
declining, do not worry with doing transaction Sell (SHORT) you could also gain
an advantage as well, why is that? Furthermore, we will discuss later.
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| two-way opportunity |
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| two-way opportunity |
4. Time trading
Above already discussed that time forex trading takes
place 24 hours a day and 5 days a week. It is caused due to the world financial
markets run alternately in a day. Below is a table of time the world trade
(forex trading).
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| Time trading |
The image above shows the winter to GMT is GMT + 8
When you make a transaction in foreign currency usual.
You have to wait bank or money changer open. For the record, the average of all
banks do not serve forex transactions above 15.00 or 16.00.
5. How to transact
Current technology is increasingly sophisticated,
everything is completely online. Such as paying utility bills, send money, or
shopping, you do not need to leave home, just simply turn on the computer is
already connected to the Internet, and transaction.
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| How to transact |
Forex trading was so Also, to conduct foreign exchange
transactions, all you need is a computer and the internet, there is even a
broker Also who provide mobile trading facility to its customers. With Reviews
These facilities, you can also make-transactions Through a PDA or mobile phone
you have. Compare it if you have to come to the bank or money changer to
conduct such transactions.
Has been mentioned above that the currency transacted in currency pair. Prior to going
any further, we will learn in advance about what the currency pair below.
Currency pairs are divided into two:
1. Major Currency
Pairs or Majors is a currency pair involving the major currencies
transacted against the USD. Which includes the major currency pair such as: EUR
/ USD, AUD / USD, USD / JPY, GBP / USD, NZD / USD, USD / CAD and USD / CHF.
2. Cross Currency
Pairs or Cross Rates are currency pairs that do not involve the USD. An
example is the EUR / CHF, EUR / GBP, GBP / JPY and others.
Currencies which have been mentioned first. we call it as
a base currency, and the currency the
second one we call it as the counter currency. When you make a transaction Buy, then you are actually buying the base
currency and at the same time selling the counter currency. Likewise, when you
make a Sell transaction, then you do is sell the base currency at the same time
buying the counter currency. This is one reason why you could do SHORT
(Sell) first when the price drops. For example, when you do sell EUR / USD,
then increasingly the price of EUR / USD down, the greater the advantage you
get.
It was the so-called majors and cross rates, whether you
already understand. If you already know, now you will learn how to way read the
price derived from the exchange rate of the currency pairs that are discussed
above.
It was the so-called majors and cross rates, whether you
already understand. If you already know, now you will learn how to way read the
price derived from the exchange rate of the currency pairs that are discussed
above.
In a forex trade, currency pair traded in the base price
of BID and ASK. BID is a benchmark for you if you want to perform a transaction
Sell. While the price of ASK otherwise, that is your benchmark for transactions
Buy.
Examples of writing BID and ASK you can see below.
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| writing BID and ASK |
From the picture above, the BID is 1.30000, and while the
ASK price is 1.30020. so if you want to perform Buy transaction, then your
transaction will be carried out at the price of 1.30020. vice versa, if you
make a Sell transaction, then your transaction will be carried out at the price
of 1.30000. easy does not it?
You can also see that the ASK price will always be higher
than the BID. The difference between the BID ASK, we call it as a spread.
BID is also often called by Exchange Rate Buy, means the
price that will be in use merchant if he wants to buy from you. and conversely,
ASK often called Exchange Rate, meaning that trafficking in always using the
price when they will sell to you. Thus as discussed above. If you will buy EUR
from traders then the price is 1.30020 USD, as well as the opposite of, if you
want to sell EUR to traders, then the price is 1.30000 USD.
That is the first step to learn Forex, with which we
discussed above hopefully can help you and understand for entry in the world of
Forex.
