In the forex market, we buy or sell currencies, with the aim of getting money (profit / profit) from price changes. From this point of view, forex trading activities are actually similar to financial market transactions in general, such as stocks. If you already have experience in stocks, you should not have difficulty in trading forex. However, you also can still trade forex even though there is no experience at all in other investments.
However, there are a number of striking differences between transactions in the forex market and other stock markets or markets. The first and foremost is, forex trading players can get profits both when prices rise and when prices fall. Unlike stocks where we can only profit if prices rise.
How come?
This is because in forex, buying and selling currencies is done in pairs. For example, if we buy a EUR / USD pair, it means we buy the Euro currency by selling US Dollars at the same time. In this case, we expect the Euro to strengthen to be higher in the future compared to now. And if that hope really materializes, then the EUR / USD price chart will move up, and we can get money from forex trading. Conversely, if we sell EUR / USD, that means we sell the Euro currency by buying US Dollars at the same time. We do that when we expect the US Dollar to be stronger than the Euro in the future. If that happens, then the EUR / USD price chart will move down, and we can still get money from forex trading even though the Euro exchange rate decreases.
A number of important concepts in Forex transactions
From the discussion above, of course you can already conclude a number of basic concepts in forex. Well, in this section we will explain further.
Currency Pair
Writing forex trading instruments is always written in pairs, such as EUR / USD, GBP / USD or USD / JPY. Why, in every foreign exchange transaction we simultaneously buy one currency and sell another.
In one pair, the first currency listed to the left of the slash ("/") is known as the Base Currency. While the second currency on the right is called the counter currency.
Buy / Sell in Forex Trading
In forex trading, the most commonly used terms are:
Buy (Buy or Long): If you think the value of the base currency will rise.
Sell (Sell or Short): If you think the value of the base currency will go down.
Rate / Exchange Rate / Price
Prices in forex trading are formed in markets of international scale. These prices will be seen in the trading software that brokers provide for us to use as traders, in graphical form. For example, as shown below:
Look to the right side of the image. The number 1.1593 appears in the white box. That is the current price of EUR / USD. However, if we are going to buy or sell, then what will be used is not the price, but the price that appears in the red box in the upper left corner of the image.
Why is that? Because the difference between the two prices will be an advantage for the broker or institution that mediates you with the market. This can be likened to the selling rate and buying rate if you do currency exchange on Money Changer.
Difference in Supply and Demand Prices
Bid price is the price at which you as a trader will sell the base currency.
Price Request (Ask) is the price at which you as a trader will buy (buy) the base currency.
The offer price is always lower than the demand, and the difference is often referred to as the Spread.
Close / close the transaction
After you open a position in a currency pair, of course you will need to also close the position to realize the advantages of forex trading. The method is to close.
So:
If you originally bought, to close means CLOSE (Sell).
If you originally sold, to close means CLOSE (Buy).
Next, see the concrete example below about how to get money from forex trading.
Examples of Practices to Get Money from Forex Trading
Let's do a simulation with the GBP / USD currency pair (Pound Sterling and US Dollar).
At one time, GBP / USD displayed a bid price of 1.2800 and an ask price of 1.2804. If at that time you estimate the value of GBP will strengthen / rise, then you take the position of BUY GBP / USD at 1.2804. After some time, the price will change. Can move up, can also move down. advanced
How come?
This is because in forex, buying and selling currencies is done in pairs. For example, if we buy a EUR / USD pair, it means we buy the Euro currency by selling US Dollars at the same time. In this case, we expect the Euro to strengthen to be higher in the future compared to now. And if that hope really materializes, then the EUR / USD price chart will move up, and we can get money from forex trading. Conversely, if we sell EUR / USD, that means we sell the Euro currency by buying US Dollars at the same time. We do that when we expect the US Dollar to be stronger than the Euro in the future. If that happens, then the EUR / USD price chart will move down, and we can still get money from forex trading even though the Euro exchange rate decreases.
A number of important concepts in Forex transactions
From the discussion above, of course you can already conclude a number of basic concepts in forex. Well, in this section we will explain further.
Currency Pair
Writing forex trading instruments is always written in pairs, such as EUR / USD, GBP / USD or USD / JPY. Why, in every foreign exchange transaction we simultaneously buy one currency and sell another.
In one pair, the first currency listed to the left of the slash ("/") is known as the Base Currency. While the second currency on the right is called the counter currency.
Buy / Sell in Forex Trading
In forex trading, the most commonly used terms are:
Buy (Buy or Long): If you think the value of the base currency will rise.
Sell (Sell or Short): If you think the value of the base currency will go down.
Rate / Exchange Rate / Price
Prices in forex trading are formed in markets of international scale. These prices will be seen in the trading software that brokers provide for us to use as traders, in graphical form. For example, as shown below:
Look to the right side of the image. The number 1.1593 appears in the white box. That is the current price of EUR / USD. However, if we are going to buy or sell, then what will be used is not the price, but the price that appears in the red box in the upper left corner of the image.
Why is that? Because the difference between the two prices will be an advantage for the broker or institution that mediates you with the market. This can be likened to the selling rate and buying rate if you do currency exchange on Money Changer.
Difference in Supply and Demand Prices
Bid price is the price at which you as a trader will sell the base currency.
Price Request (Ask) is the price at which you as a trader will buy (buy) the base currency.
The offer price is always lower than the demand, and the difference is often referred to as the Spread.
Close / close the transaction
After you open a position in a currency pair, of course you will need to also close the position to realize the advantages of forex trading. The method is to close.
So:
If you originally bought, to close means CLOSE (Sell).
If you originally sold, to close means CLOSE (Buy).
Next, see the concrete example below about how to get money from forex trading.
Examples of Practices to Get Money from Forex Trading
Let's do a simulation with the GBP / USD currency pair (Pound Sterling and US Dollar).
At one time, GBP / USD displayed a bid price of 1.2800 and an ask price of 1.2804. If at that time you estimate the value of GBP will strengthen / rise, then you take the position of BUY GBP / USD at 1.2804. After some time, the price will change. Can move up, can also move down. advanced
Komentar
Posting Komentar