What is Forex: Definition, How it Works, Terms and Tips for Playing

What is Forex: Definition, How it Works, Terms and Tips for Playing
What is Forex: Definition, How it Works, Terms and Tips for Playing

Forex trading is no longer something strange in Indonesia. This activity is starting to be carried out by many people. However, there are quite a few who still don't understand about forex trading. Below, the fxgifts team will explain what forex is and how it works. Then, what do you need to do if you want to enter the world of foreign exchange(forex)? The discussion here is very complete. So, keep following until the end, okay? Don't forget to note it down, okay?

Understanding Forex

What is forex? Forex is short for foreign exchange. Forex itself can be interpreted as the exchange of foreign currency or foreign exchange. From this term then emerged an activity called forex trading or online forex trading. The definition of forex trading is an activity of buying and selling foreign currency. This activity is carried out for various purposes. In fact, the goal is the same as other types of trading, namely to make a profit.

This forex trading activity can also be called a business or investment. Forex trading activities take place on a network which is then known as the forex market. This forex market is valid in all countries and can be accessed 24 hours. Apart from that, many parties can be involved in the forex market, from individuals to large-scale companies.

If you want to play Forex, how do you do it?

To be able to play forex for beginners is very easy. In fact, everything: from registration to trading activities, can be done online. How is the process? First, you have to look for the best forex broker, such as Instaforex, Etoro, or Capital. After that, all you have to do is register and then make a deposit. The method is very easy if you are interested, the fxgifts team provides the following example:

1. Instaforex

Summary of Instaforex:

  • Company: Instant Trading Ltd.
  • Establishment: Instaforex is a trademark of the Instaforex Group which was created in 2007.
  • License: FSC Saint Vincent.
  • Achievement: Most Active Broker in Asia in 2020 | Best Affiliate Program in 2020 | Most Innovative Forex Brand in Asia in 2015.
  • 30% deposit bonus for beginners who register for the first time.
  • Leverage is quite good, namely 1:1000.

How to Register on Instaforex, Very Easy!

  • Visit the Instaforex website.
  • Open Trading Account.
  • Please fill in the registration form in three stages. Fill it in completely, OK?
  • Registration Successful! After that, please fill in the desired deposit amount. If so, click select. You can also check the terms and conditions of the 30% BONUS. However, make sure you study these provisions so that there are no misunderstandings later.
  •  After that, carry out the transfer process using various methods. Take your pick.
  • If so, you can download the InstaForex application on PlayStore. Then, fill in the ID and Password. Please check your email to see your ID and Password.
  • Application displays after successful login.
  • Get ready for forex trading! Finished.

2. Etoro

Summary About Etoro:

  • Founded = 2007.
  • Type = International broker.
  • Headquarters = Cyprus.
  • Trading instruments = Forex, shares, indices, crypto, commodities, and currencies.
  • In one application, you can carry out various trading instruments!
  • Application = Need VPN and available on Playstore.
  • Platform = User friendly.
  • Training facilities = Online education, suitable for beginners.
  • Service facilities = available Customer Service (CS).
  • Copytrading facilities.
  • Fees = Free for deposits and commissions.
  • Deposit & withdrawal methods = Credit card, e-payment (PayPal, Netteler, Skrill, and local online banking ), Visa, and Mastercard.
  • Minimum deposit = $200.
  • Minimum withdrawal = $50.

3. Capital.com

Summary of Capital.com:

  • Founded = 2009.
  • Type = International broker.
  • Head office = London, England.
  • Trading instruments = Forex, shares, cryptocurrencies, commodities, indices, and CFDs.
  • License = International class (FCA, CySEC, NBRB).
  • Account type = Demo (practice) and Real account (real trading).
  • Costs = Relatively small.
  • Application = Available on Playstore.
  • Deposit = Minimum 20 Dollars.
  • Deposit & withdrawal methods = Debit Card, Paypal, MasterCard, Visa, Skrill, and Netteler.

Forex Market

It has been mentioned previously that the forex market is the place where forex trading transactions take place. Before you know more about forex trading, you must know about the forex market first. Here are some things you need to know about the forex market.

1. Activity

Activities carried out in the forex market are the same as in other markets, namely buying and selling. However, in this market, there are no goods or objects being sold in real form. Objects traded on the forex market are foreign currencies.

2. Perpetrator

Forex market players are very diverse, ranging from individuals to certain financial institutions, multinational banks, and large companies. What's even more interesting is that every player in the forex market can play multiple roles. They can act as sellers or buyers.

3. Trading Hours

The forex market applies in various countries in the world. The time difference that applies in this world means that the forex market can be accessed 24 hours a day. There are 4 sessions that apply in the forex market, namely: the Australia or Sydney session at 05.00-14.00 WIB.

  • Asian or Tokyo session at 07.00-16.00 WIB.
  • European or London session at 13.00-22.00 WIB.
  • American or New York session at 20.00-05.00 WIB.

4. How to Access

Even though there is no physical location, the forex market can be accessed very easily. You can access this market online. There are several types of platforms that can be used to access the forex market.

Terms in the Forex World

For beginners who want to enter the world of forex trading, of course, there are many things that must be understood. Not only do you understand what forex is, but you also have to know how it works. To make it easier for you to understand it all, here are some terms in the world of forex that you need to know first.

1. Trader

Traders are actors who trade in the world of the forex market. Anyone can become a trader and make lots of profits. You can also become a trader by buying and selling currencies through the Indonesian Forex platform.

2. Broker

A broker or broker is a company that facilitates traders to buy and sell on the forex market. Brokers will provide facilities for traders to connect with large banks to carry out currency buying and selling transactions.

3. Balance

Balance is the initial capital that traders will deposit with the broker before starting trading. Like buying and selling activities in general, you need initial capital. In the world of forex trading, this initial capital is referred to as balance.

4. Margin

Margin is the amount of money you have spent on transactions in the forex market. After the balance is deposited with the broker, there is an amount of money in the deposit that you have to spend again. This expenditure serves to start trading.

5. Free Margin

Free margin is the opposite of margin. If the margin is the money you spend on transactions, then the free margin is the remaining capital you have. After removing the margin, the balance or capital you have will decrease. The amount of money you still have is called free margin.

6. Equality

While trading, of course, you will experience profits or losses. These two things will affect the amount of capital or balance that you have. This change in the amount of initial capital due to profits or losses during trading is known as equality.

7. Leverage

Leverage is a unit used to summarize transaction value in the world of trading. For example, you have to make a deposit of 100,000 dollars. This figure is considered too large so a leverage of one thousandth is taken, namely 100 dollars. The profit obtained later is also calculated as one-thousandth of the total profit.

8. Buy and Sell

In the world of buying and selling, we are familiar with selling and buying activities. Likewise, in the world of the forex market, there is buy and sell. Buy is a purchase transaction and is carried out when the currency price falls. Sell ​​is a selling transaction and is carried out when the currency price rises.

9. Pip

A pip is the smallest change in value that can be found in a currency pair on the forex market. For example, 1 pip for the EUR/USD currency pair is 0.0001. These pips are also commonly called points.

Doing Forex Trading

If you already know what Forex is and are familiar with the important terms in it, then now is the time to learn how Forex works. Beginner traders usually have difficulty understanding how forex trading works. In fact, the way forex trading works is very simple. Just like buying and selling activities in general, forex trading also involves the same actors and processes.

Traders can carry out currency buying and selling activities independently or through the help of a broker. Traders need to have initial capital or balance and then spend a certain amount of money to make transactions on the forex market. As a trader, you can carry out buying and selling activities. You can buy currency when the price drops and then save it as a form of investment. If the value of the currency rises again, you can sell it again. That's how it works until you get a lot of benefits.

Learn Forex Trading

You already know what forex is and how it works. Now is the time for you to start learning to trade. Here are some tips that you can do to learn about forex trading.

1. Learn from Various Sources

There are lots of sources that you can use to learn more about forex trading. You can learn trading by reading articles or books. Apart from that, you can also take various online classes about trading. You can also join seminars or workshops about forex trading.

2. Create a Demo Account

You don't need to register for forex and trade directly. You can train yourself by using a demo account. There are many platforms that provide demo accounts so you can practice trading. Take advantage of these facilities and practice as often as possible.

3. Trading Practice

You can practice trading using bonus capital from the broker. Usually, brokers provide bonus capital with a value that is not large. Even though the value is only small, you can use it to practice trading.

4. Using a Nano Account

You can also use a nano account to learn more about forex trading. This nano account is not a demo account but a real account. It's just that this nano account facilitates you to trade with the smallest capital value. This account is provided for novice traders to learn.

Tips for Successful Trading

Forex trading can open up abundant profits for you. Even though the trading risks are large, the profits you get are also very large. Apart from understanding what forex is carefully, you also need to master several tips. Here are some tips for success in the world of trading that you can apply.

1. Choose a Trusted Broker

Choose a trusted broker so that you can trade successfully. There are lots of companies or brokers that are currently easy to find. Choose a broker who provides the best offer and is truly trustworthy. Don't risk your money by choosing an inexperienced broker.

2. Do it calmly and thoroughly

Forex trading must be done calmly and carefully. You should not panic if things happen that are out of your control. You should also not rush when making decisions. You have to be very careful in reading the opportunities in order to gain large profits.

3. Use Stop Loss

Stop loss is the lowest value limit used to limit the amount of your loss. If the price reaches this value, the system will close the position to avoid larger losses. If things happen that are out of control, you should not hesitate to apply this stop loss.

4. Be Wary of High Leverage

Leverage is leverage that allows you to spend less capital. However, be careful of this high-leverage value. When the leverage figure is high, you may be tempted to make large transactions. If the conditions are bad, then you could actually lose more money.

5. Be patient and don't force profits

Patience is needed in the world of forex trading. You shouldn't want to get rich quickly this way. Especially if you are a beginner trader. You should not focus on profits alone. If profit is all you want to get then you will definitely tend to be in a hurry and not be careful.

6. Use the Right Platform

There are many types of platforms that you can use for forex trading. Use the right platform for forex trading. Use a platform that is trusted and can facilitate trading smoothly. Look for platform recommendations that are easy to access anytime and anywhere.

Now you understand what forex is, how it works, and what you have to do to be successful in trading. You have many opportunities to become successful through forex trading. Apply the right strategy so you can reap lots of profits in the world of forex trading.
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