Last Updated: January 20, 2022
When it comes to trading, there are many financial instruments you could explore and one of them is Foreign Exchange (Forex), but what is Forex? According to Dicks (2010, p. 3), Forex is where money is bought and sold in an international market. This means that if you want to buy money from another country like the United States Dollar (USD), you have to convert it from your currency type to get 1 USD ($1). To simplify, you could see the example below here.
For example, I am based in Indonesia where my currency is the Indonesian Rupiah (IDR) and I want to have $1,000. What would I do first? Well, the first thing I would do is to convert IDR (Rp) to USD ($) which is around Rp 14.000, to get $1 and then multiply 14.000 to 1.000. Voila! The result is 14.000.000. This means I need Rp 14.000.000 to get $1,000. In short, USD/IDR price is Rp 14.000 where IDR is the currency you have and USD is the currency you want to convert.
Aside from converting from one currency to another currency, he also explained that the Forex market is an anonymous entity that makes everyone who participates in the market leave a footprint that might change their life circumstances (Dicks, 2010, p. xi). Dicks could mean that those who participate in the Forex market might have changed their life by the Forex market; it could be that say, Mr. Handy, who has been participating in the Forex market for 10 years, made him become a humble person. The footprints could also be seen on the chart of a currency that involved greed and fear psychologies that humans naturally have (you would understand what I mean if you have experienced trading the Forex market and have understood trading psychology).
Conclusion
Forex is one of the financial instruments in which you could convert your currency that you have to another currency depending on your purposes such as trading, business, buying foreign goods, or other things that need foreign currency. The Forex market could also change peoples' life as the market always moves unexpectedly and those who arrogantly think that they know everything in the Forex market would get swept by the market where arrogant people would realize that they only know little and become humble. One thing for sure is that if you want to trade in the Forex market, you have to be prepared for the consequences of what might happen in the future to your money in your Forex account. That is why if you want to trade in the Forex market, always use the money you could afford to lose to prevent unnecessary situations that would disrupt your life.
Written by Andre I.
Reference
Dicks, James. 2010. Forex Trading Secrets: Trading Strategies for the Forex Market. New York: McGraw Hill.