Understanding Foreign Exchange (forex)

Understanding Foreign Exchange (forex) or the Forex (foreign Exchange)

Foreign exchange is also called normal or with other words such as foreign exchange, foreign exchange, forex or also FX is the currency in a country spend by overseas as a means of payment valid in the country

Other than money used as legal means of payment, also developed into a commodity can be traded. Own foreign exchange market experienced a rapid growth in the early decade of 70's. As for the cause foreign exchange market grew rapidly among others is:

1. Foreign exchange rate movements in the movement so that a significant interest to some circles to a splash in the foreign exchange market.
2. Business of the mengglobal. Sengitnya competition with the business to make companies must find new sources of power that is cheaper, and spread around the world giving rise to demand for the currency of a particular country.
3. The development of telecommunications as a means of quickly with the phone, Telex, fax, Internet, has provided convenience to the market actors to communicate so that transactions more easily done.
4. Benefits that accrue in the foreign exchange market that tends to increase the willingness of various parties try to get the gain (profit) from foreign currency exchange rate movements.

FOREX (Foreign Exchange) or better known as the forex (Foreign Exchange) is a type of trade / trade transactions of a country's currency against currency other countries that involve the markets the world's major money for 24 hours in the ongoing.

Forex market rotary movement from the market Australia & New Zealand is in progress pukul 05.00-14.00 WIB, continue to market, namely Japan & Asia Singapore is in progress at 07.00-16.00 WIB, to European markets, namely Germany & the UK that took place at 13.00 - 22.00, to the American market that takes place at 20.30-03.30 WIB. Deep development of the history, central banks belonging to countries with reserves of foreign currency even the biggest can be defeated by the strength of the market forex (foreign exchange) are free.

Foreign exchange rate movements that change from second to second is influenced by the law supply (offer) and demand (demand) that always involve a variety of market have different interests. The market are:

1st Central Bank. A country's central bank (Bank Indonesia, such as in Indonesia) concerned of the forex market with the goal to stabilize the position of exchange countries is known as the intervention activities.

2nd Company. To improve the competitiveness and the cost of production companies are always make the exploration of various resources - resources that new and more cheap. Bisanya we call this activity with the import. And the company also akan always conduct exploration activities to expand market distribution of goods and services that have been in production by the company that will ultimately arise income in other currencies. Usually we call this activity with the export. Due to the activities this is the import and export companies sometimes need a currency with a number of other countries large enough.

3rd Society or individual. Society or individual can conduct a transaction currency in foreign sebabkan by several factors. The first factor is the search for the source additional earnings, by utilizing the fluctuation of foreign exchange rate movements for gain. The second is the need for consumption at the time outside country. Examples are a family who have to travel abroad only a American countries. At the time they will perform the activities of consumption in the United States, they can not pay the dollar because the currency is valid in the United States dollar United States, so they would not want to exchange the money must first be United States dollars. Other example is a father who will finance the school in Australia then the father should be to exchange the money in the form of Australian Dollars to first.

4th General Bank. Bank general sale and purchase transactions to foreign exchange for various purposes between serve other customers who want to exchange money into other forms of currency, or to meet its obligations in the form of foreign exchange.

5th Broker / Dealer. Broker is a company which is the mediator of a currency transaction foreign. They help us to find buyer or seller.

6th Government. Government make foreign exchange transactions for various purposes, among others, pay foreign debts, receiving income from abroad that need to be change again into local currency.

Benefits play forex (forex trading) other than the business:

1. There is always the buyer or seller so that we can get a profit through the two transactions direction (buy or sell).
2. Market is open for 24 hours non-stop from Monday to Saturday.
3. Capital is small, but they can deal in a large amount.
4. Liquiditas a high level, you can take the money / profit you at any time.
5. with advances in technology, you can become a professional trader without alias office work at home via the internet.
6. Profit in currency Dollar.
7. Can be run by anyone regardless of age, sex, etc..

What currency is sold only? All currencies of the world that has a high selling power. Example: EUR / USD: Euro against U.S. DOLLAR

GBP / USD: Pound sterling against U.S. DOLLAR

AUD / USD: Australian Dollar against U.S. DOLLAR

USD / JPY: U.S. DOLLAR against JAPANESE YEN

USD / CHF: U.S. DOLLAR against Swiss Franc

EUR / JPY : EURO against JAPANESE YEN

The simple, currency exchange rate can be defined as the difference between the value of the currency. Thus, exchange rates show a currency of a country if exchanged with the currency of other.

To make it easier to read when the exchange rate, there are two things you must remember that the currency is written The first is the base currency (base currency) and the currency is written both eyes currency benchmark (counter currency). Example USD / JPY means that the base currency = USD and JPY = counter currency.

On which the USD exchange rate as the base currency, if the increase occurred in the exchange rate, and give meaning that terapresiasi USD (Dollar menguat) and currencies such as JPY pembandingnya terdepresiasi (Yen weakened).

In forex transactions, the price of buying and selling price of a currency expressed in kuotasi bid (sell) / offer (buy). Bid price is the level where we can sell the base currency (and on the at the same purchase counter currency), while the offer price is the level where we can buy base currency (at the same time we sell the counter currency). This means purchase a forex akan followed by other foreign exchange sales. Hence it is said in the forex trading there are always sellers and buyers.

For example, the exchange rate of USD / CHF = 1.3154/1.3159 means that we can buy with 1 USD price of CHF 1.3159, or sell with the price of 1 USD CHF 1.3154. So if we buy USD we will automatically sell or CHF Swiss Franc (USD purchase using CHF = accept loss of CHF and USD). Similarly, if we sell the USD, we will automatically accept loss of CHF and USD.

If the exchange rate to be above the table, then there is always the difference between bid and offer rate is the value bid is always lower than the value offer. Difference between bid and offer spread is called. This difference can occurred because the bank or trader (forex trader) akan profit by selling foreign exchange with a higher price than the price when buying. The large spread between bid and offer are indicated by a point or pip. For USD / JPY, 1 pip is number two behind the comma (0.01), while for other foreign exchange rate is 1 pip four number behind the decimal comma (0.0001). As an example of the table in exchange for: EUR / USD: 1.1874/77 spread= 0.0003 (3 pip) USD / JPY: 118.59/63 spread= 0.04 (4 pip).