Know More About Forex (Part I)
Foreign Exchange or we are more familiar with Forex trading if interpreted in language means “foreign currency trading”. While Forex trading that we often hear is the name of a selling / buying activity (exchange) of a country’s currency with another country’s currency.
If analogous to the language, indeed Forex Trading is very similar to the concept of Money Changer and Stock Trading. Then in terms of the benefits that can be obtained, it is the same as the concept of buying and selling or trading in general.
Examples of Forex trading cases like this:
In December 2017, Thomas bought USD (US currency) as much as $ 10 with the rupiah exchange rate at that time of Rp. 10,000. then in January 2018, the USD exchange rate increased to Rp. 11,000 per USD. So if Thomas sells his USD, he will get a profit (11,000 – 10,000) x 10 = Rp. 10,000. These results are obtained only from $ 10 only, if the amount is doubled, of course the profits obtained will double as well.
Even though it has a language analogy similar to Money Changer, Stocks, or Futures, however, there are some striking differences between Forex and some of the above.
Difference in Money Changer with Forex
Money changers are different from forex. Forex can be traded online while the money changer is only offline.
Money Changer transactions take longer
Money exchange at a money changer takes a long time because it is done manually. While the forex transaction is done just by clicking on the order instantly.
In forex trading, the price rate that can be obtained is Realtime. While Money Changer rounds the Price Rate, causing losses to customers
Fees / Fees
Costs incurred in each transaction in Money Changer are usually relatively expensive. On the forex trading platform, we will only be charged low Spread / Fees / Commission. There are even some forex brokers that offer spreads that are close to the “0” number.
Currency traded on the forex platform
On Forex platforms, only currencies that have high liquidity can be traded. The feasibility of a currency to be traded on Forex can also be seen from the economic stability of a country. For example in developed country currencies such as the United States Dollar (USD), British Pound Sterling (GBP), and European Euro (EUR).