18.10.2018
The foreign exchange market itself experienced a rapid growth in the early decades of the 70s. As for the cause of the foreign exchange market is growing rapidly, among others are:
1. Movements in foreign exchange rates that experienced significant movement so that it appeals to certain circles to engage in the foreign exchange market.
2. Businesses are getting more global. As business competition gets bigger, companies need to find new resources that are cheaper, and spread all over the world, causing demand for the currency of a particular country.
3. The rapid development of telecommunications in the presence of telephone, telex, fax, internet, has made it easier for market participants to communicate, making transactions easier.
4. Gains earned in the foreign exchange market tend to increase the desire of various parties trying to gain a gain (profit) from the movement of foreign exchange rates.
FOREX (Foreign Exchange) is a type of trade/transaction that trades the currency of a country against other currencies of the country which involves the major money markets in the world for 24 hours on a continuous basis.
Forex market movements spinning from the market of New Zealand & Australia which took place at 05:00 to 14:00 pm, continued to the Asian markets of Japan and Singapore which took place at
07:00 to 16:00 pm, to the European market of Germany & England which took place at 13.00-
22:00 pm, to the American market which took place at 20:30 to 03:30 pm. In its historical development, the state-owned central bank with the largest foreign currency reserves can be defeated by the free forex market forces.
The fluctuating movement of foreign exchange values is influenced by the supply law and demand which always involves various market participants who have various interests. Market participants include:
1. Bank Central. The central bank of a country (such as Bank Indonesia in Indonesia) has an interest in the forex market in order to stabilize the country’s currency exchange position commonly referred to as intervention activities.
2. Company. To improve competitiveness and reduce production costs the company always explores new and cheaper resources. Usually we call this activity with import activities. And the company will also always conduct market exploration activities to expand the goods distribution network and
Services that have been produced by the company that will eventually arise income in other currencies. Usually we call this activity with exports. Because there are import and export activities that companies sometimes require the currency of other countries with a large enough amount.
3. Community or individual. Society or individual can make foreign exchange transactions caused by several factors. The first factor is the search for additional sources of income, namely by exploiting fluctuations in the movement of the value of foreign exchange to gain profit. The second factor is the consumption needs when abroad. For example there is a family who travel abroad call it the United States. At the time they will do the consumption activity in America then they can not pay it with the rupiah because the currency in effect in America is the American dollar, so they inevitably have to exchange the money first into US Dollars. Another example is a father who will finance his children’s school in Australia then the father must exchange his money into the Australian Dollar first.
4. Commercial Banks. Commercial banks conduct buying and selling foreign exchange transactions for various purposes, among others, serving customers who want to exchange money into other currencies, or to meet its obligations in the form of foreign exchange.
5. Broker / Dealer. Broker is a company that mediates the occurrence of foreign exchange transactions. They help us to find buyers or sellers.
6. Government. The Government conducts foreign exchange transactions for various purposes, among others, paying foreign debt, receiving income from abroad that must be redeemed into local currency.
Advantages of forex trading against any other business:
1. There is always a buyer or seller so we can get profit through two-way transactions (buy or sell).
2. The market is open for 24 hours non-stop from Monday to Saturday.
3. Small capital, but can transact in large quantities.
4. High liquidity level, you can take your funds / profit anytime.
5. With technological advances, you can become a professional trader without an office alias working at home through the internet.
6. Profit in Dollar.
7. Can be run by anyone regardless of age, gender, etc.
What currencies are traded?
All world currencies that have high selling power.
Example:
EUR / USD: EURO against US DOLLAR
GBP / USD: POUND STERLING against US DOLLAR
AUD / USD: AUSTRALIAN DOLLAR against US DOLLAR
USD / JPY: US DOLLAR against JAPANESE YEN
USD / CHF: US DOLLAR against SWISS FRANC
EUR / JPY: EURO against JAPANESE YEN
Simply put, the exchange rate can be interpreted as a comparison of values between currencies. Thus, the exchange rate denotes the price of a country’s currency if it is exchanged in the currency of another country.
To make it easier to read the exchange rate, there are two things to remember is that the first currency is the base currency and the second currency is the counter currency. Example USD / JPY means USD = base currency and JPY = counter currency.
At the rate at which USD is the base currency, if there is an increase in the rate, gives the meaning that the USD appreciates (the dollar strengthens) and the comparative currency for example JPY depreciates (weaker yen).
In forex transactions, the purchase price and the selling price of a currency are expressed in the bid quotation
(Sell) / offer (buy). Bid is the price level at which we can sell the base currency (and on
Same time buy counter currency, while offer is price level where we can buy base currency (and at the same time we sell counter currency). This means buying a foreign currency will be followed by another forex sale. Hence in forex trading is said to always have sellers and buyers.
For example, the USD / CHF rate = 1.3154 / 1.3159 means that we can buy 1 USD at a price of 1.3159 CHF, or sell 1 USD at a price of 1.3154 CHF. So if we buy an automatic USD we will sell Swiss Franc or CHF (buy USD using CHF = receive USD and lose CHF). Similarly if we sell USD, we will automatically receive CHF and lose USD.
If you note the above exchange rate table, then there is always the difference between the bid and offer rates where the bid value is always lower than the offer value. The difference between bid and offer is called a spread. This difference can occur because the bank or trader (foreign exchange traders) will make a profit by selling forex at a price higher than the price when buying.
The amount of spread between bid and offer is indicated by pip or point units. For USD / JPY, 1 pip is two digits behind the comma (0.01), while for other exchange rates 1 pip is four decimal places behind the comma (0.0001). For example from the above exchange rate table:
EUR / USD: 1.1874 / 77 spread = 0.0003 (3 pip) USD / JPY: 118.59 / 63 spread = 0.04 (4 pip)
Where to trade FOREX?
Before a company that provides forex trading services through the internet, to become a trader then we must follow a very tight selection. The income of a very large trader is one reason why this profession is a dream for many people.
Need the deep analysis before importing market!
Learn first about political and economic news (fundamental analysis) as well as technical analysis of chart trends of a currency pair you want to trade, because the technical trend supported by the fundamentals can indicate which direction you should make a transaction (Buy or Sell).
The currency of a country will weaken in the event of bad things in the country such as earthquakes, major storms, bomb blasts, economic recession, high unemployment, and other adverse events.
On the contrary, there will be strengthening of the country’s currency if there is an increase in interest rates, low unemployment rate, recovery from disasters, and the like.
Also note the risk management and your financial level, so you do not trade in a way blindly.
Trade in a safe and do not get greedy, and do not get carried away by emotions, because trading in Forex requires knowledge, a level of patience and good concentration.
Forex or Foreign Exchange (Forex) is NOT Judi, because Forex trading is the same as the trade in general and only differ in the object only (in the Forex object is the currency, whereas in general trading object is goods or services), besides that
The movement of world currency prices can also be analyzed through technical analysis (trend graph) and fundamental analysis (news and issues).
The main difference between Gambling and Forex Trading is that gambling plays only for luck without any analysis if there is more to do with myths, whereas forex trading has certain real indications that can be analyzed for profit, so we can minimize the loss factor.
Fundamental Analysis
Fundamental analysis is an analysis by considering the factors that affect a country’s economy. Prediction is emphasized on price movements and market trends by finding out the economic indicators, government policies, and other factors that affect the economic resilience of a country.
The main indicators are seen to know the economic fundamentals of a country:
1. Gross National Product (GNP) = Gross National Income (GNP) is the total amount of goods and services produced by residents of the country, both domiciled domestically and abroad.
2. Gross Domestic Product (GDP) = Gross Domestic Product (GDP) is the total amount of goods and services produced by a country, whether by a domestic company or a foreign company operating in that country.
3. Inflation = Inflation is an increase in general price levels in an economy caused by (a) excess demand or (b) an increase in input factor costs.
4. Balance of Payment (BOP) = International Balance of Payments is a record of all international economic transactions covering trade, finance and monetary terms between a resident of a country and a resident of another country for a period.
5. Interest Rate The nominal interest rate of a country that rises higher than other countries will make the investor / speculator interested to invest the funds in the country’s currency.
In addition to the indicators in the bag, there are many other economic indicators that influence currency price movements in the forex market, for example: Employment Cost Index, New Home Sales, Personal Income and Personal Consumption, Producer Price Index, Unemployment Rate, etc. .
To master how the changes in the above indicators influence price movements in the money market, you must learn in various economic books or on sites that address the issue.
Technical Analysis
Technical analysis is an analysis used to predict future price trends using graphs or mathematical calculations.
Technical analysis holds the assumption that:
– The price formed in the market is a reflection of all the factors that exist in the market.
– The behavior of investors in the past that occur repeatedly can be used as a reference to predict future trends in events.
– It is impossible that price movements occur only randomly and unpredictably because price movements follow trends.
– The price will move in a certain direction (trend) and will continue for some time before reversing direction.
In this case, to perform technical analysis, you need to learn through books on forex trading or through sites that provide this information. You can use keywords in google search with some keywords below to learn more details about technical analysis.
1. How to use Metatrader 4 trading platform
2. How to forex technical analysis
3. Learn forex technical analysis
4. Best forex technical analysis
5. The most accurate forex technical analysis
