All You Need to Know about Forex trading

All You Need to Know about Forex trading

Forex trading is a trade of foreign currency. It is different from the activity of buying and selling foreign currency in Money Changer, because of the purpose. While buying and selling foreign currency is done so that the person is able to do some transactions overseas, forex trading is done in order to get some profits. Since this kind of trading is a business activity. Here are some informations you may want to know about trading forex.

The Functions of Trading Forex

In the process, trading forex has some main functions that gives effects to the actors. The functions of trading forex are divided into 3:

1. To Make the Currency Exchange Process Easier

In daily economic activity, people sometime need foreign currency. Whether it is used as business activity, shopping, trip, investment, and etc. The currency exchange is able to be done with a system that called Kliring. And one of the functions of forex trading is providing that service. Forex trading is able to be done online, so that you do not have to go to Money Changer. How to Behave Before Do Forex Business and Start Forex Trading

2. Hedging

The second function of trading forex is hedging. Hedging means protecting the value. It is an act which is usually done by forex trader as a guarantee, so that the value of the investment funds is not decreased or loss when the trader sells foreign currency in 2 different markets. In this case, some banks are also taking roles, both bank inside the country and also foreign bank in the United States of America as the guarantor of the funds.

3. Arbitration

The third function of trading forex is to do arbitration. Arbitration is basically the difference of interest rate from 2 different currencies. And arbitration is an act which is done in order to get some profits from the difference of the currencies itself. Simply, this act is done by buying a low value currency in a country, and selling that currency in a country where the value of that currency is high.

Forex trading is just like double edged sword. You are able to get rich by trading forex and vice versa. Forex trading has a high risk so that you need to completely know how to do this kind of trading, and look for what kinds of risks which can happen. Make sure you are careful if you want to try this kind of trading called forex trading.


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