Forex, a very suitable investment for beginners
What currencies are traded on the Forex market?
Products traded by Forex traders and investors are currency pairs or commonly called pairs. In the forex market, a currency pair is also a reflection of the exchange rate of one currency with another. The most popular currency pairs traded are:
- USD / CHF: Swiss Franc
- GBP / USD: Pound
- USD / CAD: Canadian Dollar
- USD / JPY: Yen
- AUD / USD: Aussie
- EUR / USD: Euro
First and second currencies
The first currency of a currency pair is called the base currency or also called the base currency. While the second currency is called the currency counter or quote currency.
All currency pairs are quoted at the bid and ask prices. The bid or price offered (always lower than Ask nutrient) is the price your broker wants to buy, so the trader must sell the currency at that price.
The principle of seeking profit in forex trading is the same as when we are a trader, that is
- buy when the price is low and
- sell when prices are high.
It’s just that the products traded are currency exchange rates from various countries.
Pips on Forex Trading
When you first get to know Forex, you will often hear the term pip. Pip is the smallest unit of a currency pair. Examples of movements in the 1 hour EUR / USD rise from 1.2545 to 1.2559, that means EUR / USD rises as much as 14 pips.
FOREX is a very extraordinary market for various reasons.
First, the forex market is one market that is free The price cannot be controlled and cannot be manipulated by anyone. That is what makes forex the largest liquid financial market in the world, with trade reaching between 1 and 1.7 trillion dollars per day.
With a very large amount of money circulation as mentioned above, it is impossible for certain parties to increase or decrease prices according to their wishes. Even a central bank or country cannot control currency exchange rates without a clear cause.
Liquidity in the Forex
Liquidity is not like the stock market, traders (traders) can open and close positions in a few seconds because there are many buyers and sellers who make transactions at any time without stopping.
One of the advantages in Forex trading is that traders can exchange foreign currencies with other currencies whose prices are higher with the help of margin leverage.
At Forex, the leverage is normally around 100: 1 and 50: 1, or even 200: 1. On the stock exchange, you can only use margins of 1: 1 to 2: 1. For example, you can buy 100,000 units with only a capital margin of 1. Very interesting right?