Forex Trading: Definition, Advantages And Disadvantages

kotrbiotech.com– Today’s Forex Trading can indeed be regarded as the fields of income that is quite promising. How not, forex trading does not require substantial capital. In addition, it is not too complicated in their use.

For information, often found the players Trading Forex are those who have long been in the world of stock trading. Then, what exactly is the definition of Forex Trading? And how does it work? Here Qoala will give the explanation in full

Understanding What Is Trading Forex

This time, maybe a lot of people will say get rich quick if you play forex trading. However, it is not necessarily accompanied by an in-depth understanding related to the definition of forex trading itself, both in terms of characteristics, advantages, and risks. In the following description, will be discussed basic understanding of forex trading must be known to all people.

Forex Trading is trading currencies from different countries with the aim to earn a profit. In this case, the forex is short for Foreign Exchange or foreign exchange. An example of forex trading is to buy the Euro (the currency of a major European), while simultaneously selling USD (American currency), can be abbreviated EUR or USD.

In the shadow of the lay people, understanding forex trading it is on the activities of the exchange of money at the Money Changer, the sale and purchase of foreign currency manually done through the money changer. In fact, forex trading is different with the transaction manually as in Money Changer.

Please be aware, the goal of a person to buy and sell currency at Money Changers is due to the need to convert currency for trading in different countries, so there is an exchange of money for physical. While forex trading is done online with the aim of getting profit. It should also be understood, forex trading is a business activity, investment, and even can also be considered to be a profession.

In the scale of international trade foreign exchange or forex is often done by various parties, ranging from the government, central banks, multinational companies, up to a particular individual who has assets in the amount of the big or big player.

Buy-sell transactions currency that occur between the various parties it’s not happened in a market with a physical building, but rather in the invisible network which is called “forex market”.

Along with the development of technology, trading forex can already reach out to a wider scope. Through the internet, forex trading can now be done by anyone, anytime, and anywhere. Currently, everyone can forex trading. You can online forex trading easily and with capital as small as $ 10 only.

History Of Forex Trading

In its history, forex trading at the end of the 90s, the only people wealthy, large financial institutions such as central banks, private banks and government, as well as commercial companies as large as Apple or Toyota who undergo this business.

They do forex trading usually for the purposes of trade, pay debt, hedging (hedging), or both. The capital required is also quite large, and not just anyone can forex business.

After the development of the internet around the world at the end of the 90s, the forex market can eventually followed by almost all individuals, from businessmen to housewives, parents and young children.

The broker also began to compose forex to be traded retail by each individual. So this time, ranging from a money changer, bank, until the carpenters that hung can plunge in the Forex market.

The end of the Period Barter and the Commencement of the Exchange of Money

In the history of human civilization, need to be aware that the exchange of goods between individuals, starting with the barter system. For example, a person requires a goat, then he met with other people who sell the two baskets of apples, and then they agree to mutually exchange their wares, then the transaction can occur.

However, with time, barter is considered to be insufficient to meet the needs of day-to-day. The main problem of the barter system is how if can’t find the people who need and supplies goods to be exchanged?

To overcome the shortcomings of barter, then made a means of payment or exchange tools in a variety of forms. In this period, the human race using shells, beads, rocks, rare, and precious metals as an intermediary.

However, please be aware that each region can apply the “currency” itself based on what they think is the most valuable, being recognized in the community, and are portable (easy to carry).

Because every region in the world using a “currency” is different, then the traders who conduct transactions between regions or cruise the island and cross the continent, so often requires reference to the exchange of currency that can be universally accepted.

In many locations, determined the agreement that the use of precious metals such as Silver or Gold as an intermediary.

The kingdom-the kingdom that stood in the it started printing “money” each with determining the levels of certain precious metals in it. In turn, the exchange is based on the levels of such. This is the beginning of the start of the exchange of currency in ancient times.

Since when the currency exchange is carried out? According to the records of Byzantium (about 4th century BC) show that the royal party to monopolize the exchange of money. Then note the Papyrus also shows that he has done a currency exchange in the era of ancient Egypt.

Other regions ranging from Australia, Indonesia, China, India, to Europe have the records respectively. So, this is not something that the emergence of the sudden in modern times.

History Of Forex Trading Simplified

The exchange of money has been going on since time immemorial, but the history of forex trading simplified as there is now actually pioneered the post-World War II.

For your information, a lot of chaos and economic crisis at the end of World War II, so the governments of the countries of the Allies feel that you require a system that will be able to unite the global economy. Then established the “Bretton Woods System” to realize that dream.

In the Bretton Woods System that was born in the town of Bretton Woods, the state of New Hampshire, United States of america in 1944, for the first time are no formal rules to govern monetary relations among countries.

The united States while it holds two-thirds of the world’s gold reserves insisted that the system was propped up on gold and the U.S. Dollar. Finally, this system requires all of the state involved to linking its currency to gold and the U.S. Dollar. However, it didn’t last long.

On 15 August 1971, the United States unilaterally severing the ties its currency with gold, so that automatically ended the Bretton Woods system. The value of the Dollar was no longer obtained from the gold reserves owned, but only from the promise of the US government.

This act would make the U.S. Dollar became the reserve currency for many countries in the World. That time also, the exchange rate between currencies is no longer determined by raw materials, but rather by keeping the system simple economics of demand (demand) and supply (supply). Rise to a new phase in the history of forex trading, namely the period of floating exchange rate (a floating exchange rate system).

After that, buy-sell transactions currency, primarily done by banks, while other parties such as the government and companies need to contact the bank as an intermediary. The companies that need can contact the bank via telephone, and bank notes at the price of a currency is bought or sold.

From here contrivances of the interbank market as a network of decentralized (over-the-counter) in which currency is exchanged and the exchange value of the currency changes dynamically.

The Era Of Online Forex Trading

The development of the global economy between the years 80’s to 90’s then delivers the world on the development of a new history of forex trading where people can come to pursue the world previously dominated by large banks and company international.

The transaction through an intermediary banking no longer must be prefixed with a phone contact, but enough with the instruction via the internet. In fact, invented also a trading platform that allows anyone to see the “price” (the value exchange rate of the currency) and selling currencies in real-time.

The development of technology ni is a crucial point in the history of forex trading, because it pushes the volume of trading in the forex market darted away up into the forex market in the world with liquidity daily reach USD5.3 trillion in 2013.

At this time also, you can find out which currencies are traded a lot as well as trying to benefit from the strengthening or weakening currency exchange rate.

Then how when you’re as “ordinary people” can benefit from this exchange? Now many of the present ” forex brokers ” who serve the trading currency for the people in the small scale.

Different to the interbank market that has the size of a standard trading (100,000 US Dollars per unit), forex brokers like this one provide community facilities for forex trading even with capital as small as a few tens or hundred Dollars.

More sophisticated in the era of mobile now, forex trading can be done via laptop, tablet, android, or iPhone. As long as there is electricity connection and the internet, you can “plunge into the forex market” and get the advantage of him, as long as know how to play forex trading .

How Forex Trading Work

Related Posts

Leave a Reply

Your email address will not be published.