What is Forex

What is Forex

Before discussing what is FOREX (Foreign Exchange) some of us must have exchanged foreign currencies such as US Dollar, Riyal, Ringgit, Yen, etc. into the form of our currency, namely Rupiah (IDR) or vice versa.

And you do this foreign exchange because you get a shipment from a family who is on vacation / working abroad, you work abroad, or because you want to vacation to each country that owns the foreign currency so you have to exchange your eyes foreign money because not all sellers accept foreign currency as a payment instrument.

How can someone / us benefit from this currency exchange? good question! we will benefit from the difference between the Buy / Sell price and this profit is the same as the profit obtained when we sell fruits or other products. From the advantage of foreign exchange, this is the birth of the forex trading business. 

Forex trading business itself has advantages when compared to other businesses such as stock trading business because in forex trading we will always be able to print profits even though the currency has decreased or increased value .

Why can we always benefit even if the currency we have is experiencing a decrease / increase in value? This is because when we run a forex trading business, we are running a money exchangerbusiness.

Money exchangers will always benefit even if they are selling / buying foreign currency. In addition to benefiting from changes in the value of foreign currency money exchangers will benefit from selling / buying fees which are then known in the forex trading business as the spread .

Who can run a money exchanger business? all individuals and institutions including banks can run this business.

So what’s the difference between money exchangers and forex trading business? the difference is if we run a forex trading business then we as an individual trader will not get a spread but instead will pay the spread to the forex broker like when you pay the sale / purchase fee of trading shares to your broker because it has helped you make a trade transaction.

Example:
You have a US Dollar currency of $ 1,000 and want to be converted into Rupiah (IDR) then you are looking for a money exchanger that can give you a more attractive exchange rate and find it using the BCA Bank service that offers the Sell and Buy rate as follows.

When you want to exchange USD currency to BCA Bank, you will be given a Buy rate and not a Sell rate which means you are selling USD currency and the BCA Bank will buy the USD currency.

So, if you are going to exchange USD as much as $ 1,000 to BCA Bank, you will get a Rupiah of Rp. 13,758,000.

And if you want to buy back USD as much as $ 1,000 from BCA Bank (on the same day with the same selling / buying rate) then you have to pay as much as Rp. 13,774,000, – more expensive Rp. 16,000, – than if you exchange USD to Rupiah (IDR) earlier.

And the difference between the sale and purchase price is Rp. 16,000, – this is called the selling / buying fee, aka BCA’s profit when running a FOREX business.

These benefits have not been added if it turns out that the Dollar (USD) value is higher or higher than before against the Rupiah (IDR).

Have money exchangers never lost? actually the money exchanger can be lost if it turns out that the USD foreign currency he bought does not go to someone else’s purchase and the value decreases. And if they don’t want to lose it means they have to sell the foreign currency with a high spread.

For example, the example of the trade above, if it turns out the dollar (USD) exchange rate decreases or the Rupiah (IDR) strengthens to 1USD equal to Rp 2,500, – then the $ 1,000 dollar in the BCA Bank will only be valued at Rp 2,500 .000, -.

And it could be said that BCA Bank suffered a loss of Rp. 11,258,000 (Rp. 13,758,000 – reduced by Rp. 2,500,000).

But this loss simulation assumes that the Dollar currency purchased by BCA does not sell well (only saved) because all Indonesians love the Rupiah (IDR) and the Indonesian economy is very good so that the Rupiah (IDR) strengthens in the eyes of the Amiiien World.

Once you know how to benefit from the forex trading business and if you are interested in running this business then it is very easy because now with the advent of technology we as individuals can start running a forex trading business in a very easy and fast way and certainly with the capital not too big.

If you are curious about how to start a forex trading business then please read the article about ” Learning FOREX Trading for Beginners ” first. There clearly explained the steps needed to start a forex trading business from zero to proficient at running it.

The following are some summaries / guidelines that can be used as a reference when going to run a forex trading business,

  1. Understand first what forex is
  2. Learn fundamental / technical forex
  3. Who are forex players
  4. When is forex trading time
  5. How to trade forex
If you want to know what is the difference between forex trading and stock trading then please read about which one? forex trading or stock trading as a reference before deciding to choose this trading business.