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FOREX (Foreign Exchange) or better known as Foreign Exchange (Forex) is a type of trade / trade transaction currency of a country against another country's currency-market involving major financial markets in the world for 24 hours on an ongoing basis (ranging from pk.5 Monday morning to Saturday at 05.00 WIB / GMT +7) According to the survey BIS (Bank International for Settlement of the world's central banks), who performed at the end of 2004, the forex market transaction value reached more than USD $ 1.4 trillion /day. And in the year 2006, the value of the forex market transactions have exceeded USD $ 2 trillion per day. Thus, the prospects for investment in forex trading is very good, besides that forex is also very difficult to be pushed around by the movement of a certain price because of its rotation is very large.

Given the level of liquidity and accelerating the movement of these high prices, FOREX has become the most popular alternative because of the ROI (Return On Investment, or the return value of our investments have been planted) and the profit will be obtained can exceed the average trade in general (usually flat average return ranges of more than 5% - 20% per month, can even reach more than 100% per month for professional traders). As a result of rapid movement, then FOREX is also a high risk if you do not have enough knowledge and risk management arrangements well.

What was traded in Forex?

The answer is Currency. In Forex Trading is memperjual currency boughtone of the other currencies. And usually uses currencycommon in the world such as EUR, JPY, GBP, EUR, CHF, AUD, etc.

Example:

- BUY GBP / USD, which means buying the currency Pounds Sterling and sell U.S. Dollar

- BUY USD / JPY, which means buying a currency U.S. Dollar and sell Japanese Yen currency

- SELL GBP / JPY which means selling the currency Pounds Sterling and buy Japanese Yen       currencyMovements in exchange rates Forex Point or usually called called Pip.

Example:

Currency movements USD / JPY from 118.00 to 117.94 means the moving of 6 pipsCurrency movements GBP / USD from 1.9030 to 1.9120 means moving for 90 pips

How does Forex work?

In the foreign exchange market (forex), we may buy or sell various currencies for profit, and Forex Trading is "2 Ways Opportunity", which we can profit by exploiting order Buy or Sell.

If we are to order the Buy and then the price of its currency exchange rate increases, we will get a profit, and so did the opposite, if Sell when prices dropped so we will get a Profit. But if we are to order the Buy and then prices dropped then we will suffer loss (loss).

Profit or Loss if we do not close the position (diclose / diliquid) the position of our order is still considered a floating (floating) or not yet realized, so as to enable the back direction. Suppose a trader install commands Buy and then found the price decline, but still not closed position (not diclose), then the trader is still suffering from the floating loss, and if later it turned out rate exceeds the price back up this position the trader will get a floating profit, and when open positions are closed floating profit (diclose) then floating these profits will be realized before a real profit and real.

BUY if you expect rates to rise the price for Profit,SELL if you expect rates to come down the price to get Profit

Example:

Suppose a trader to buy 10.000 EURO (EUR) compared to U.S. Dollar (USD) beginning in 2001 when the price of EUR / USD when it was 0.9600. Means that these traders buy and sell 10.000 Euro 9.600 U.S. dollar And when, in May 2003, Trader was sold back to buy 10.000 EUROnya to rate USDollar again with EUR / USD when it was 1.1800. Trader then it will get 11.800 U.S. Dollar from the sale of 10.000 EURO.

From the example above, then the trader will benefit (profit) for:11.800 to 9.600 = USD $ 2.200Position Offers (Sell) is often referred to as bid or Short term, while Sell (Buy) is often referred to by the term or Long Ask Spread Sell BuyIn Forex, there is a difference between exchange rates and Sell Offers, and this is called the Spread. Sell the exchange price (bid) is always lower than the price Sell (Ask).

Example:EUR / USDBid Ask1.3000 1.3002 Bid = Sell; Ask = Sell

Example above is the price spread indicates Sell and Buy from EUR / USD is for 2 pip (or 2 points).

The purpose of this spread is to indicate the difference between purchase price and we, who where when if we had orders to bid the next we should look at his Ask price to calculate our profit or loss, and vice versa. So let us bid on mengorder with the number 1.3000 (bid (sell) means that if the price drops, we'll make a profit) and then we'll see it later than Asknya numbers, so if it then falls Ask price is less than 1.3000 then we will make a profit

Example:

6 pm position of EUR / USD:

Bid Ask

1.3000 1.3002

(At that time we bid on the order number 1.3000)

At 7 pm the position of EUR / USD turned into:

Bid Ask

1.2986 1.2988

(At this moment we close our position reply from 1.3000 at 1.2988 rate _ see figures Ask her) In this example, we will make a profit of 1.3000 - 1.2988 = 12 pips If we order the bid, and then if the numbers Ask him to move down smaller than the number we originally bid, then we will get a Profit. When you order with Ask, and then if the number of his bid to move up exceeds the number of our Ask the beginning, then we will get a Profit. But if instead it will be Loss.

What is the value of the movement of Pip (Point) it?

For Forex Trading against the U.S. Dollar there are 2 kinds of currencypublic key is a diversified trading Direct and Indirect.

Example:

- Direct: GBP / USD, EUR / USD, AUD / USD, etc. (the ... / USD)

- Indirect: USD / JPY, USD / CHF, etc. (USD /....)

1 Pip  its value is:

For currency Direct: 1 point worth $ 10 (for the use of regular 1 lot), while for the use of 0.2 lot in value is $ 2  1 Pip , and if you profit 15 points in the EUR / USD 0.1 lot with the use of means = profit $ 15

For Indirect currency:

1 point worth about $ 7 to $ 9 depending on the rate at the time (to use as many as 1 lot), while for the use of 0.2 lots ranging in value $ 1.4 to $ 1.8 1 Pip, and if you're 15 points profit on USD / JPY with the use of means 0.1 lot = profit approximately $ 12How to calculate the Profit and Loss us:

Example:

Such as we start trading Forex with initial capital of $ 5000, then the way our transaction count is:

For Direct currency:

example for us to trade with a capital of $ 5000 on 1 lot of regular (or quantity contract sizenya $ 100,000) and we do Buy in EUR / USD at 1.2000 and then positions to take profits diclose at position 1.2010, then we will profit by:(1.2010 - 1.2000) x 1 lot x 100,000 = $ 100 (profit)or vice versa if the same loss calculations

For Indirect currency:

example for us to trade with a capital of $ 5000 on 1 lot of regular (or quantity contract sizenya $ 100,000) and we do Sell on USD / JPY at 110.10 and then positions to take profits diclose at 110.00 positions, then we will profit by: ((110.10 - 110.00 ) x 1 lot x 100000) / close position 110.00 = $ 90.91 (profit) or vice versa if the same loss calculations.Understanding Margin, Leverage and Contract SizeThe function of the Margin and Leverage can make you do not need to capitalize 10.000 EURO to 10.000 EURO to buy it, but enough to guarantee capital for about 100 Euro only then you are able to trade in a number of 10.000 EURO

Another example.

You want to trade in currencies USD / JPY as much as $ 10,000. In the modern Forex Trading you need not require as much capital to $ 10,000 for transactions in this amount. Because in this modern type of Forex you can borrow the stock as much as $ 10,000 to be used to trade, and for that size loan you enough to guarantee as much as $ 100 just to stock. So is like you borrow as much money as $ 10,000 but you can just guarantee you a number of assets $ 100 only.

And if your order will have finished close the margin (collateral) will be returned to your portfolio account more comprehensively.

The function of such as 1:100 leverage you can increase the power of your transaction to about 100x as much, so such a margin of $ 200 then you can trade on the maximum amount of $ 200 x 100 = $ 20,000

How to calculate the margin (collateral) is used to transactIn general, quantity 1 lot = $ 100,000 contract size (regular);

and 0.1 lot = quantity$ 10,000 contract size (mini)

(you can ask your broker will be great quantity contract size onlotnya units)For the base currency is USD currencynya (CAD / ...):

(example: USD / JPY, USD / CHF), then the guarantee margin calculation is:

Margin = Total Lot x 100,000 x% margin (for the use Lot units)orMargin = Quantity Contract Size x% margin (for those with Quantity unit)

Example 1:

You did order the currency BUY USD / JPY as much as 1 lot with leverage 1:100, then the margin calculation is:Margin = 100,000 x 1 x 1%= $ 1000

Example 2:

You did order the currency SELL USD / CHF as much as 0.3 lot with leverage 1:200, then the margin calculation is:Margin = 0.3 x 100,000 x 0.5%= $ 150

For the base currency is not currencynya USD (... / USD):

(example: EUR / USD, GBP / USD), the margin calculation should be made to guarantee U.S. Dollar exchange rate first, by the way:

(for those with Lot units) Margin = Total Lot x 100,000 x% margin rate x price quote at that time or (for those with Quantity unit)Margin = Quantity Contract Size x% margin rate x price quote at that time

Example 1:

You do order BUY (Ask) in the currency EUR / USD as much as 1 lot with 1:100 leverage and exchange rates Bid / Ask him when it is 1.2998/1.3000, then the margin calculation is:Margin = 100,000 x 1 x 1% x 1.3000= $ 1300

Example 2:

You do order SELL (bid) in the currency GBP / USD 0.2 lot with as much leverage 1:500 and the exchange price Bid / Ask him when it is 1.9010/1.9014, then the margin calculation is:Margin = 0.2 x 100,000 x 0.2% x 1.9010= $ 76

What is Margin Call?

Margin call is a condition where you have open positions are not allowed to be continued again for your equity cash running low, so that it can result in Loss Total.Do not let your trading reached Margin Call, therefore you notice resistance point!The derivation of a margin call is: (IMPORTANT TO KNOW!) CALCULATION OF MARGIN CALL THE PUBLIC:

Example:

Suppose your initial investment is $ 1000 and you do order lots at 0.2 SELL GBP / USD as an example No. 2 above. So margin (collateral) that is used is $ 76. And the rest of your balance of capital (equity cash) after the cut by a margin of collateral it will be $ 1000 - $ 76 = $ 924. And because you use 0.2 lot, then the value per pip movement it into $ 2, and the remaining capital for the $ 924 you will grin and bear losses up to $ 924 / $ 2 = 462 points. So if your losses exceed these prisoners (minus 462 points) then your position will open automatically diclose by the system, because in order to avoid cash-balance your equity becomes negative, and was named the subject Margin Call, so it means a margin call if your equity cash until the fall (due to loss) below the margin of the insured then you will get a margin call, and you'll open position by force and diclose automatically by the system.