For those of you who have ever traveled or even traveled abroad, it may be familiar with currency exchange or foreign exchange ( foreign exchange / forex ). If you look closely, the exchange rate can rise and fall or fluctuate depending on when you exchange money you have with other currencies.
The exchange rate fluctuations are then used by some people as one of the instruments to invest and reap profits. Curious how?
Simply put, you can make an investment by saving foreign currency in a certain period of time at home or at the bank and redeem it when the saved currency experiences a strengthening of the exchange rate. However, there are actually other ways that some investors do to make more profits, namely by buying and selling with currency exchange (forex trading)
However, it is not an investment if the name is without risk. With high profit potential, the opportunity for loss is quite large. To what extent are the risks and opportunities for profit?
Financial planner Eko Endarto said, forex trading is usually done in a derivative or using a contract between one party and another (bilateral). The contract, in the form of an exchange agreement for payment whose value is derived from the product that becomes the reference value, in this case the two currencies to be exchanged.
“So there is a purchase contract, now investors are participating in the contract transaction. The contract is in the form of derivatives,” Eko told CNNIndonesia.com, quoted Saturday (1/19).
Forex trading is generally done in the futures exchange because it is not physical. Unlike the forex investment in banks by exchanging physical money.
First of all, you must choose an official broker from domestic or overseas which is directly supervised by the commodity futures trading authority in each country. In Indonesia itself, the authority is under the Commodity Futures Trading Supervisory Agency (Bappebti).
“Maybe it’s better to use brokers from Indonesia alone, fearing using foreign brokers turns out to be unofficial,” Eko said.
Some brokers who can provide forex trading facilities in Indonesia and get Bappebti permits, such as PT Askap Futures, PT Monex Investindo Futures, and PT Soegee Futures.
After choosing, you can immediately register by opening an account. Then, the broker you choose will teach you how to read charts or charts of currency movements in each country.
Head of Futures Research Monex Investindo Ariston Tjendra explained, investors must pour initial capital of around US $ 500 dollars or around Rp.6.65 million (exchange rate of Rp13,300 per US dollar). This initial capital can then be used to start trading.
“So the trade will use the initial US $ 500 fund,” explained Ariston.
Furthermore, you can immediately trade or buy (buy) the currency you want. This currency will always be adjacent to other currencies, such as USD / EUR or USD / JPY.
If the USD is in front, then it means you buy the United States Dollar (US) currency which is compared to the Euro or Yen Jepan. However, if reversed to EUR / USD means you buy a Euro that is compared to the US Dollar, and so is JPY / USD.
“So look at the currency in front, but still pay attention to the sentiments of the two countries,” Ariston said.
An example of sentiment for the US, for example, when there is a target for raising the Fed’s interest rate twice a year, the US dollar will immediately strengthen. In addition, Donald Trump’s policy will also influence the movement of forex .
“So look at the sentiments from countries whose currencies are traded,” he said.
However, forex trading is different from other investments because it is two-way. When compared with stocks, investors buy shares at low prices and sell them when the stock price has risen to realize profits.
Well, with this two-way trading , investors don’t need to worry too much if there is a negative sentiment towards the currency being traded right. The reason is, investors can already sell their forex contracts when they do not have the contract.
“So for now, for example, the price is US $ 100, but for two more days the investor estimates (the value of other currencies) to be US $ 80. To be able to profit, you can sell first two days later, buy at US $ 80,” Eko explained.
Thus, investors will get a profit of US $ 20. The purchase fund will be deducted from the investor’s margin, along with the profits achieved.
Not for Beginners
Eko argues, you should first try the stock investment before trading forex . Because, forex trading is more complicated and not as easy as stocks. In addition, the movement itself is more dynamic.
“So forex trading is intended for those who have long been involved in the investment world because of the high risk,” said Eko.
In addition to stocks, maybe you can try physical gold investment first so you don’t get surprised when you get a loss when the gold price drops. After that, you can switch to trading gold in the futures exchange, then trading forex.
“So you feel like you have goods whose prices go up and down too,” Eko explained.
With fluctuating currency value movements, Eko said that the return that investors can get from forex trading in a year can reach 30 percent to 40 percent.
“If the average share is only 10 percent to 20 percent a year,” Eko concluded.