Understanding Forex Trading and the Difference from Stocks
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Hearing the word “Forex”, perhaps for some people is something that sounds familiar to them. It’s normal if you feel unfamiliar, because this term is more closely associated with people who are quite experienced in the world of investment. Forex or Foreign Exchange means foreign currency transactions. In Indonesia itself, forex is better known as forex or foreign exchange. So, what is forex trading?
If you are starting to wonder what forex trading is, forex trading is an investment product with the activity of buying and selling foreign currency. The activity of buying and selling foreign exchange, known as forex trading, offers attractive profits. Maybe you think that when you exchange money to a money changer, it is a forex trading activity. However, actually the explanation will be more complex. So what is forex trading and how is it different from foreign currency exchange?
What is forex trading? In general, forex is a transaction exchanging the currency of the country where you live with the currency of a foreign country of your choice. Apart from that, forex needs are usually personal or private, one of which is as a means of payment in other countries that will be visited. So, if you exchange money at a money changer, the activity can be called foreign exchange. Meanwhile, forex trading has different meanings.
What is forex trading? Forex trading is an activity of buying and selling foreign currency which is usually done online. The aim of forex trading as an investment is to seek profits from the difference in sales figures made. Usually those who carry out forex trading activities are known as traders.
Forex (Foreign currency) is itself a foreign exchange transaction. As with marketing, the goal is to make a profit.
simply, forex trading Like buying foreign currency and then storing the money for a period of time and selling it again when the value of the currency increases or strengthens.
However, if you invest in such forex, the profit you get is generally small.
Investors buy and sell forex online like stocks to make more profit. As with any investment, there are of course risks that come with it.
The higher the profit, the higher the probability of loss. For a complete understanding, here is a review of forex trading.
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Understanding Forex Trading
In Indonesia, Foreign currency Or forex can be called foreign exchange or foreign exchange. The meaning is the same, that is, a business to make a profit by exchanging foreign currency.
Citing various sources, understanding forex trading This is possible because of the need to use foreign currency. For example, when you want to travel abroad, you need to make transactions in the relevant country’s currency.
The exchange turned out to be profitable. Profits are derived from the difference in the value of the currencies traded.
Investors need to monitor and analyze currency market conditions and factors that may affect currency rates around the world in order to make big profits.
The difference between Forex and stocks
Stocks and forex are types of liquid investments. However, there are some differences between the two. Summarizing various sources, here are the differences between forex and stocks.
1. Stocks do not have a ‘leverage’ option
In general, understanding Use It is the use of borrowed funds that increases the return on investment. in forex tradingInvestors can use the optionUse’ with a certain ratio.
Read More : Is Trading the Same as Gambling?
2. Trading hours
Stock exchange trading hours are limited from morning to evening following the IDX (Indonesia Stock Exchange) trading schedule. Meanwhile forex tradingtrading hours last 24 hours.
3. Basic analysis
In its application, forex does not require fundamental analysis. Meanwhile, stocks prioritize fundamental analysis that aims to ensure that the stocks bought have a good foundation to continue growing.
4. Investment objectives
Investments are generally focused on long-term profits. In forex, currency rates fluctuate, so forex is more suitable for trading than investment.
Meanwhile, stocks can be used as a trading and investment tool. Stocks that perform well tend to fluctuate and increase so they are used as trading and investment options.
5. Goods sold
In forex, traded goods are relatively small. Most of it forex traders Just focus on the price of major currency pairs like EUR/USD, USD/JPY, GBP/USD, USD/CAD, AUD/USD and NZD/USD.
Meanwhile, stocks have many trading instruments or issuers. There are hundreds of issuers that can be bought and sold on IDX. Thousands of stocks can be traded or accessed through integration with the world’s stock exchanges.
6. Nature of transaction
The last difference is the time of sale. The nature of stock transactions can be said to be one-way. You buy an issuer when the stock exchange opens and sell it when the stock exchange closes. The difference in closing price can be profit or loss.
Meanwhile in forex, transactions are two-way. You can buy and sell for a short time and then buy again after some time.
How to trade Forex
The way to do it forex trading It’s not much different from stocks. There are many things you can do to make foreign exchange transactions.
1. Choose an official broker
Take your choice Broker It is officially registered by the Commodity Futures Trading Regulatory Agency (BAPEBT).
You can check the details. Broker Officially on the CoFTRA website. Although you can choose a foreign broker, it is better to use a local broker that is easy to find for security reasons.
2. Register on the broker and create an account
Usually for beginners forex brokers Teaches you how to read graphs of exchange rate movements for each country. However, before you sign up, ask how much of a deposit you need to pay first.
3. Conduct marketing activities
After registering and creating an account, use your deposit to capitalize to buy the currency you want.
When you buy foreign currency, the currency will be side by side with other currencies. For example, USD/EUR, meaning you buy US dollars in euros, and vice versa.
It is understanding. forex trading, Methods and Variations with Stocks. Understanding forex trading In more detail not to lose money. Many experts evaluate forex trading More difficult and complex than stocks.
