Forex business is now being considered as a viable and profitable type of investment. Pioneered in the late 90s, forex is increasingly popular among business people and also people who are interested in investing. So, what is forex and how to play it?

Forex is an online foreign exchange where profits can be made from currency movements around the world. In addition to being safe to do, forex can be a consideration for those of you who want to have more income. Before starting, understand and follow these 6 tips on how to play forex.

Choose a Trusted Broker

There are so many online forex brokers and platforms that offer lucrative profits. You need to remember that playing forex requires real money capital and is not an activity that should be taken lightly. Mistakes in entrusting your money to fake forex brokers can have a bad impact on your finances.

For your convenience and safety when trading forex, first learn the advantages and licenses of online brokers. How to play forex safely starts from choosing a trusted forex trading broker with a license from a credible regulator such as the FCA from the UK and ASIC from Australia. Forex brokers in Indonesia themselves are protected and regulated by the Commodity Futures Trading Supervisory Agency (BAPPEBTI).

This official regulation from BAPPEBTI can protect you in transacting and playing forex. Not only the feasibility test during the registration process, but BAPPEBTI monitors the feasibility of forex broker services periodically. If you find a forex broker that is not supervised by BAPPEBTI, its feasibility and legality are questionable.

Select the Appropriate Account Type

After that, you need to see the account type options offered by the broker. Each broker offers different account types, but they are categorized into three levels, namely micro, mini, and standard levels. A micro account is a trading account with a small lot size (0.01 lot), only one-tenth of a mini account and one-hundredth of a standard account. For this account, a minimum deposit of US$500 to US$1000 is recommended.

If a micro account is suitable for beginners who want to try forex, a mini account is the next level with a larger lot size, namely 0.1 lot or one-tenth of a standard account. If you are a beginner who wants to reap more profits and is ready to face greater fluctuation risks, prepare a minimum deposit of US$2000 to US$5000.

Finally, there is a standard account that is most commonly offered by all forex brokers. It does require a larger initial capital, around US$10,000, but the facilities obtained are also more. You can trade various types of currencies and get more profit. The lot size of a standard account is also larger, which is 1 lot with a minimum size per lot of US$100,000.

It is highly recommended for beginners to try the demo version of forex before deciding on the account type. By trying the demo version of forex trading, you can better understand how to play forex before finally investing capital and choosing the appropriate account type.

Understand World Market Conditions

Like most investment products, forex is also affected by external factors, such as market conditions and the world economy. You should diligently read financial news to be able to estimate the right time to play forex. If there is an economic crisis or an event that can affect the value of forex, avoid opening a position to avoid losses.

This needs to be remembered because in uncertain situations, forming strategies and estimating forex trading steps will be more difficult to do. No one can know for sure what choices will bring profit. Moreover, broker platforms also tend to experience server disruptions due to the large number of incoming orders.

If you already understand the forex trading system better, then you are able to understand market movements more clearly. Every economic news can be a golden opportunity to play forex. However, you still have to be aware of the possibility of losses in the future.

Risk Management

One of the foundations of a safe way to play forex is risk and financial management. It is undeniable that every forex player has a risk of loss. No one can escape this. Therefore, open a position with a margin or capital below 20% to minimize losses that can occur.

Many beginners invest all their capital because they are tempted by the great potential. Unfortunately, this is not a smart step that you should take, especially considering the high risk of loss. Don't be too hasty in making decisions, do stable and consistent trading to get maximum profit.

Not all forex trading activities are profitable, so you also need to set a nominal transaction limit. By having a transaction limit, you also avoid the potential for forex trading to become a gambling medium. Forex is a form of investment that requires a calculated strategy and analysis. Avoid entering many lots and set the nominal amount of money that you are willing to spend to invest via forex.

Perform Trading Analysis

Before making a forex transaction, you need to learn more about trading analysis that can help you achieve greater profits. You can't just follow your instincts, you have to apply several steps before starting forex activities. First, determine the currency pair. There are three types of currency pairs available, namely major currency pairs, cross currency pairs, and exotic currency pairs.

Second, do an analysis to estimate the direction the currency pair chart will move. Understand the pattern, time frame, and type of forex chart. You can apply fundamental, technical, or market sentiment analysis. After being sure of the estimates from the analysis carried out, open a position and wait for market conditions to change according to the estimate. If there is no significant change as expected, close the position that has been opened.

Third, you must set a schedule for doing forex trading activities. That way, it will be easier to evaluate every step you take. Finally, use a written journal to record the various profits and losses you have experienced. This is very useful so that you understand more about how to play forex and not repeat the mistakes you have made.

Focus On One Currency Pair

As explained earlier, there are three types of currency pairs known in the forex world. The main currency pairs are currencies that are paired with the US Dollar, such as EUR/USD, AUD/USD, USD/JPY, and many more. This currency pair has a lower spread and is the most widely traded.

On the other hand, cross currency pairs are currencies that are paired with non-US Dollar currencies. Examples include AUD/CAD, EUR/JPY, and others. Major currency pairs are indeed easier to calculate and more profitable, but some cross currency pairs are also widely traded.

Exotic currency pairs are currencies of countries with high economic growth rates that are paired with the US Dollar or Euro. Some of the most common are USD/SGD and USD/MXN. Despite having high spreads and low liquidity, there are times when exotic currency pairs are more profitable.

Ready to apply the six ways to play forex above? The more routinely you play forex, the more reliable you will be in estimating forex trading charts. Keep in mind that forex is a type of investment that is high risk with equally high returns. Apply the methods above and you are ready to achieve investment success.

Visit GIC Indonesia to get information about the world of trading. You can also join us in the Telegram Community GIC Trade and Telegram Channel GIC Trade. Don't forget to check the Youtube account of GIC Indonesia which is full of lots of information, and follow our Instagram account to get information about various interesting webinars that you can join.