What Is Forex Trading? This Is A Simple Concept And The Risks For Beginners That You Must Know

A simple business concept is part of a basic economic system that buys and sells goods and services for higher profits. Trade is the exchange of goods for money. So what is Forex trading?

CAT Institute, a training institute accredited by the Ministry of Education and Culture (Kemendikbud), reveals what Forex trading is from the basic word “Forex or foreign exchange “, which means a business transaction for the exchange of foreign currency in the financial market.

The transaction is made in order to profit from the difference between the purchase and sale prices. Forex trading is a transaction made by exchanging two different currencies in the foreign exchange market. What is the foreign exchange market?

What is Forex Trading? This is a simple concept and the risks for beginners that you must know

What Is Forex Trading

Understanding the Forex trading that takes place in the Forex market, the CAT Institute explains that the liquidity of this market is quite high, since currencies are in circulation in all major countries of the world, trading can reach 4 trillion dollars a day, and it is idle around the clock. . – Stop the day from Monday to Friday.

Forex Trading Transaction Concept

The concept of Forex trading is to buy a currency at a price that is not much different from a normal buying and selling transaction and sell it at a high price. Forex trading is where you can profit from the difference between the buy and sell prices.

The ability to master and analyze the forex market(s) is a major key to being a successful forex trader. CAT Labs talks about what to consider when preparing to trade in the Forex market. Any?

“The value of currencies is constantly changing and depends on the volume of international trade, interest rates, central bank and government policies and other economic indicators”, he explained.

However, throwing away the same source is tantamount to Forex trading with a double-edged sword. At the same time that Forex trading can make a trader rich, it can also cause the trader to run out of capital, leading to unwanted bankruptcy.

Forex Trading Risks

The biggest risks that Forex traders can face are price fluctuations, which are highly volatile and liquid. The CAT Institute classifies them into two categories. Any?

1. High volatility

The higher the price volatility of a currency or currency pair, the higher the trader’s profit. At the same time, the associated risk increases. It also increases the probability of “losing”.

2. High leverage

Understand Forex trading with the “margin trading” system. This allows brokers to offer capital loans or “leverage” to traders to increase their margin funds and make them bigger.

The existence of this system allows traders to make huge profits even if they start trading with little capital. However, there is a problem that significantly affects margins when traders incur “losses” on their trades.

If “leverage” is too high, the trader will go bankrupt, run out of capital or even get into debt to the broker. At the very least, as a beginner trader, you should check these risks before you start trading Forex.

How to Read Trading Price Charts

Before you decide to start, it is important to understand how to read the price chart of a financial asset or instrument such as Forex trading. The prices of all these investment components may go up, down, or not at all.

The CAT Institute introduces terminology often used to read and analyze markets. Any?

1. Trend

When the price moves in a certain direction, this is a pattern that can go up and down.

2. Coverage

An image with a flat (lateral) movement speed, without zooming in or out.

3. Bullish/Rally

This is a picture of price gouging.

4. Downtrend

Looks like the price has dropped.

It is important not only to understand the terminology, but also to have the correct and appropriate “time” for the transaction in progress. For example, if you are a “day trader” on a stock exchange that trades or takes positions once a week, you can use the W1 – D1 averaging period.

Then boldly look for the highest and lowest prices for a certain period in accordance with “period”. Using trading indicators such as “moving average” or “probability” will help in your analysis. indicators and others.

Types of Trading

What Is Forex Trading

1. Stock trading

The first type of trading is stock trading. Shares are shares held by a public company that are sold to investors through a stockbroker. Investors benefit when a company increases its earnings.

Stock trading is the activity of buying and selling stocks over a period of time, usually within a fairly short period of time. To trade a stock, you must either sell or buy when the price moves. To make a profit, you need to make the right decisions.

2. Trade in goods

Commodity markets are where companies offset future risks by buying and selling natural resources. Previously, valuables such as oil and precious metals could only be traded physically, but today traders can buy and sell online. Traders can also benefit from trading these instruments.

3. Forex trading

The following types of transactions are foreign exchange transactions in which the currency of one country is exchanged for the currency of another country, associated with the main world foreign exchange markets 24 hours a day.

Pihak yang terlibat dalam pass forex tidak hanya bebepa orang, tapi banyak pihak yang meramaikannya baik yang bersifat kelembagaan maupun non kelembagaan. Pihak-pihak inilah yang ikut terlibat melakukan berbagai transaksi di pasa valuta asing.

Leave a Reply

Your email address will not be published. Required fields are marked *