FOREX

What is Forex?
Forex is short term for Foreign Exchange which is the biggest financial market in the world exceeding USD 2.5 Trillion daily!!!

What is Forex market?
In any market there are "thing" that been traded. In Forex market the traded "thing" is the currency or the money itself. People buy and sell money to make money.

In Forex market, currency is been traded in pair. Example:
EURUSD - EURO (European Union Currency) and USD (United State Dollar)
EURJPY- EURO (European Union Currency) and YEN (Japanese Yen)
USDJPY - USD (United State Dollar) and JPY (Japanese Yen)...............to name a few.

The first 3 alphabet in each pair known as BASE CURRENCY and the last 3 known as QUOTE CURRENCY.The denomination of base currency toward quote currency known as EXCHANGE RATE and quoted as BID and ASK or SELL and BUY. SPREADS is the point different between bid and ask. Example,
EURUSD will be quote as:
BID : 1.4000
ASK : 1.4005
SPREAD : 5 pips

The good thing in Forex is that, it can be traded in both directions, either when the exchange rate is going UP or going DOWN. You can buy at certain rate and sell later after the rate move up OR you can sell and buy back after the rate going down.

How to make money in FOREX?
To make money, then we have to collect "pips". What is pip? Pip is the value of decimal point counted from the last 4 and sometimes 5 digit from the exchange rate quote (except anything that been pair with JPY).
Example, EURUSD exchange rate change from 1.4000 to 1.4001. The value change is 0.0001. That is one pip.

In Forex the daily exchange rate that changes more than 100 pips is considered normal and sometime it could happen in less than 1 minute.

Imagine you have USD 10000.00. You buy EURUSD pair at 1.4000 amounting to USD 14000 and suddenly the rate jump to 1.4100 which makes your holding has become USD 14100. You sell back at the 1.4100 which means you get 100 pips that equivalent to USD100. That is how we make money in Forex (there is other thing need to be taken into account in real Forex)

Do we need that much (USD 10000 ???) to start in Forex?
No. Another good thing in Forex is, we don't need to have USD 10000 to get profit of USD100. How? We called LEVERAGE. In easy definition, leverage is the ability to use/control our broker money few hundred times than the money that you invest (or the MARGIN).

Normal types of leverage offered by broker are as follow1:50, 1:100, 1:200, 1:400 and 1:500. Example,You invest USD 50 and you have the leverage of 1:200. Then you are allowed to control your broker money amounting of USD 10000. Now you can trade with that USD 10000 to get your USD 100 ........or more.

What happened if the price goes against your trade direction? Then the process will reverse. Instead of getting USD100.......you might also lose USD100.


..........tok batin forex