Introduction To Forex Trading

The actual existence of forex trading has been around since the discovery of techniques to convert the currency of a country to another country's currency. However, institutionally there recently after the establishment of the Board of arbitration of futures contracts (futures). An example is the IMM (International Money Market-founded in 1972) which is a division of the CME (Chicago Mercantile Exchange-special product handling perishable commodities). Another example is the LIFFE (London International Financial Futures Exchange), TIFFE (Tokyo International Financial Futures Exchange) etc.

Turnover that occurs on the forex market reached US $ 5 trillion per day (a survey BIS – Bank for International Settlements – in Setember 2008). This number is 40 x greater when compared to turnover in other futures exchanges like commodities or market shares in each Stock Exchange Advanced Nations anywhere! It means that much trading volume, this market is very liquid (liquid), and the control of trade could not be held by only a few Parties that have large capital. Currency movements is totally dependent on the market. There are many large or small player in forex trading, but none of them were able to control the movement of foreign exchange rates.

Often traded currencies are the currencies of developed countries such as the U.s. Dollar (USD), Japanese Yen (JPY), Japan Switzerland Francs (CHF), United Kingdom Pounds (GBP), the Australian Dollar (AUD) and the Euro (EUR). All currencies are traded in pairs (referred to as pair), for example, EUR/GBP, CHF/JPY, etc.

And from which I have benefited from this investment? To put it simply, the benefits of this investment is obtained from the difference in value when we buy and resell the currencies concerned. For example, in April, Amir buy Dollar with Exchange rate of USD 8500 per Dollar as much as US $ 1000. Then at the time of purchase it was Amir spend money as much as Rp. 8500,-x 1000 = Rp 8.500.000,-and then in may, the exchange rate of the Rupiah strengthened against the Dollar to Rp. 9500,-per Dollarnya then Amir earned net profit when he sold the back Dollarnya is equal to: (9500-8500) x 1000 = Rp. 1,000,000,-easy and simple is not it? And because it is the average time it takes to buy and sell back the currency in question is usually no more than one month, the forex trading is classed as an investment with a short period of time.

Perhaps such questions would arise from you: "then what's the difference with forex trading buy sell in the money changer?" There are some notable differences between forex trading with money changers. In addition to the pair traded foreign currency is one with other foreign currencies (at the money changer is usually compared with the Rupiah), forex trading does involve trade physically. And more importantly, because it does not involve physical trading, forex trading can be executed with system margin or collateral (margin trading).

For example, if I wanted to buy US $ 10,000, then with margin trading system I simply took out her only 1% funds i.e. $ 100 as a guarantee. But the benefits I get from appreciation (increase) the US Dollar was equal in value to the US $ 10,000 that I bought. Very simple and because it does not involve trading in physical form (investors don't hold the currency bought or sold, the only evidence of this transaction only), then the guarantee is given can be very small i.e. only 1% of the amount purchased.

There are still many aspects in the world of forex. This short article is just briefly explain the notion of forex trading. You are welcome to continue in the next article of this website.