What Is Forex, A Scam?

In order not to be fooled by various fraudulent modes under the guise of forex trading, let's understand properly what forex is and how the trading system works through forex instruments.

What is forex is a foreign currency instrument for investment options. Forex or Foreign Exchange is a foreign currency instrument that is often used as a commodity for transactions such as trading.

Due to high volatility, forex trading is an investor or trader strategy to get high risk high returns quickly.

Recently, this instrument has been increasingly discussed because forex is one of the instruments used for trading using robots. Therefore, forex is an instrument that is in great demand by many people.

Apart from that, forex is an instrument that is used in fraud mode because many people are not familiar with this one instrument.

Hearing the name forex, maybe you are familiar and know what it means a little. But, do you really know what forex is and how it works? Therefore, let's learn about forex and its ins and outs here.

What Is Forex?

If you go abroad, of course you need money from that country to make transactions. Therefore you have to exchange rupiah against the country's currency. Well forex is the exchange.

Reporting from investopedia, foreign exchange or forex is a global electronic market for trading international currencies and currency derivatives.

Even though it doesn't have a physical central location, the forex market is the largest and most liquid market in the world based on trading volume which can reach trillions of dollars every day.

Most trades are made through banks, brokers and financial institutions. I was so busy, the forex market can be open 24 hours a day and five days a week. Occasionally, the forex market may remain open on holidays, although trading volumes may be lower.

Forex is one of the efforts to make a profit by many people. Even so, it is not uncommon for the foreign exchange market to be used as a non-profit facility, you know.

Therefore, the view that forex is fraud is wrong because forex is indeed a commodity that is traded on the forex market. However, recently fraud has been rife under the pretext of a forex trading robot.

In order to get to know you better, let's learn what forex is and how it works!

How Forex Works

For those of you who are new to forex, of course you are curious about how this international currency market actually works.

Let's take the example of EUR/USD = 1.298.

These two words are pairs or foreign currency pairs that you will trade. The left side (EUR) is the base currency while the right side (USD) is the quote currency. Meanwhile, 1.298 is a notation that shows 1 Euro = 1.1296 USD.

Next, let's make a buy and sell transaction. For example, the position of the buying price and selling price for EUR/USD are:

Buys: 1.1296

Sell: 1.1298

The buy price means you buy 1 Euro at 1.1296 USD. As for sell, it means you sell 1 Euro for 1.1298 USD. Easy isn't it?

What needs to be noted is, when trading, the base currency (left side) is used as a benchmark against the initial currency (right side).

That is, if you buy EUR/USD, you hope that the Euro will strengthen. Conversely, if you find that you have a prediction that the USD will strengthen against the Euro, then you must sell.

What is Forex Trading?

Currently, the words forex and trading are two inseparable words because forex is one of the instruments that many traders use as trading objects.

What is forex trading is the activity of buying and selling foreign exchange which is carried out online with the aim of taking advantage of the difference in buying and selling prices of foreign exchange.

This trading activity takes advantage of the forex market which is quite volatile because foreign currencies whose value tends to fluctuate because they are influenced by many factors.

As technology develops, an algorithm or system now appears that helps traders in their trading process, which is called a trading robot.

Forex Trading and Investing

Forex or foreign exchange is a foreign currency that is often used as a trading object because of the high level of volatility of this asset. However, forex can also be used as an investment asset because we can save money in a country's currency in the hope that the value of that currency will increase in the future so that it can generate profits in the form of capital gains due to rising prices.

However, trading and investing in forex carries quite a high risk because currency values are influenced by various factors so that prices tend to be unstable.

Basically, the choice of forex for trading and investment depends on the ability of the investor. If you have enough time to monitor and analyze market developments, then you can make forex a trading object. However, if you are a more passive type then forex can be used as your investment choice. However, keep in mind that every instrument has risks so as investors we must consider this carefully when making a decision.

Is Forex a Scam?

Recently there has been widespread promotion of forex trading investments with the lure of big profits if investors invest a certain amount of money in certain trading management.

One example of forex trading fraud is the “entrusted investment” scheme. In the process, potential investors are asked to invest for investment. Not only that, prospective investors are also required to become a member and pay a membership fee in the trading management.

This membership is divided into several levels with different membership fees. The promotion is the higher the level, the higher the profit percentage that can be achieved. The highest level is required to "invest" with a large amount.

It is clear that the so-called forex trading scheme is a fraud and not real forex trading.

In the foreign exchange trading industry, or forex, there are often acts of fraud and other illegal activities carried out by irresponsible persons. Nonetheless, forex is by nature a legitimate global marketplace for trading the currencies of countries around the world, offering great opportunities for the discerning and prudent investor. Therefore, for investors who want to try their luck in forex trading, it is very important to do their research first, understand the risks involved, and ensure that they are only dealing with trusted and internationally recognized brokers.

Forex Trading Robots

Foreign Exchange or forex is a foreign currency that is often used as a trading object using robots because the price is fairly volatile so traders can take advantage of it.

However, forex is still quite common among the public so that many of them are tricked into bulging investments under the guise of forex trading using robots that can multiply money quickly.

So, as a potential investor/trader, you must analyze your risk profile and be careful in choosing the investment instrument to use. This is because not all investments are suitable and safe for you in the long term.

If you are going to use a robot, then you need to look at the past performance of this robot so that you have a projection of the performance of this robot when you use it.

Tips for Doing Forex Trading

It should be noted that forex trading is a high-risk activity. In a matter of minutes, it could be that your money will be gone. Therefore, to minimize the risk, you should follow the tips below:

1. Define Forex Trading Goals

In order not to take the wrong step, you must first make a goal of forex trading. How much profit do you want to get? That way, you already know what strategy you will choose and how long it will take you to achieve it.

To calculate profits, you can use direct or indirect rate pairs. For example, to calculate direct, you can use USD as a suffix. Next use the formula:

Profit/loss = (selling price – buying price) x Contract Size x Lot.

Furthermore, to calculate the indirect rate pair, USD is used as a prefix. Then use the formula:

Profit/loss = (selling price – buying price) / liquidation price X contract size X lots.

2. Create a Demo Account

After learning about forex, don't immediately make a transaction. Instead, use a demo account first. With a demo account, you don't need to be afraid of losing money because everything is free.

In addition, the market conditions in the demo account also show the real market. So this account is perfect for you to use as a learning tool.

3. Learn Technical and Fundamental Indicators

You can't conquer the forex market in just one day. Therefore, use your time well to learn about forex. There are two instruments that you must pay attention to in learning forex, namely technical and fundamental.

Technical indicators are a way for you to do calculations, predictions and analysis related to price, volume, and market interest related to foreign exchange. Actually, this indicator is usually already available on the platform you choose. However, you still need to learn a lot about this.

The next indicator is a fundamental indicator. Even if you are only trading, things that smell fundamental also have a big impact. Fundamental indicators come from macroeconomic data as well as socio-political issues that can affect foreign currency movements.

Leverage in Forex Trading

Leverage is an important factor in forex trading. In simple terms, forex leverage is a comparison of the margin a trader gets with the amount of funds from the broker to increase profits.

In forex trading, leverage is described in ratios such as 1:25, 1:50, 1:100, and so on. The size of this ratio depends on how much capital (margin) is needed to obtain loan funds.

How to Understand Leverage Proportions

As mentioned above, leverage is a ratio between capital and borrowed funds. How to calculate the proportions? Depends on the trader. For example, if you use 1:100 leverage with a contract size of $100,000, then the required margin is only $1000.

What needs to be noted is that the level of leverage is not directly proportional to the return that will be obtained. The higher the leverage, the greater the risk you will get. Therefore, you should use a proportional amount of leverage.

Some proportional forex traders suggest a proportion ratio of 1: 100 and 1: 200. However, this ratio also depends on the margin used. However, this proportion can give you a profit that is arguably ideal.

Diversification in Investments

Forex or foreign exchange is an investment instrument with high volatility, so it is widely used by traders as trading advice.

Forex can give you big profits as long as you understand well how this instrument works and what risks may arise in the process.

However, you must always remember that every investment has different risks, so you need diversification as a risk mitigation that you have to do.

If you are looking for a safe and profitable investment for the long term, then maybe you should try a business investment with an equity crowdfunding scheme that can give you long-term passive income from dividends, the amount of which will be in accordance with your business performance.