TECHNICAL ANALYSIS part 1
Risk and Profitability
Yeah a wonderful day to talk about risk and profitability. How big the risks that may occur if I invest forex? Is it with profit? As a professional investor you should learn to see all the investment schemes not always from profit. There are many other factors besides the wonderful dream of profit you should know and one of them is the so-called risk. Forex is an investment that is classified as high risk-high return investment program. That means it is an investment that has a high risk. But also high profit returns. Yes worth the risk. Well, these two sides of profit and risk can not be separated from each other. It's like a side of a coin. There is however across. Crossed yet there. Ok then let's start talking about these two things. If so because I am an umbrella before the rain, I will discuss the risk side first. Hope this cheerful day does not become a gray day after you read this article. Broadly speaking, there are three main things you need to know before starting your forex investment mainly from risk issues.
First, total loss possibility (this means the possibility of overall loss) can reach 90% of all funds you invest. Uh, what? 90%? Not so good as it sounds. Yes it is not so good. But remember this is the worst possible possibility. Why it can reach 90%, this is due to the god helper we used to know called margin trading. Well not a god help anymore dong ...
For example, Rama buys as much as 1 GBPUS lot on the GBPUSD pair at 1,9600. In the case when the GBP strengthens against the USD, then Rama will benefit. Now what if the opposite happens? What if the price moves down? To what extent did Rama's position survive?
In the forex trading market even though you can open as many as only 1 lot and require a guarantee of only 100 pounds, does not mean the minimum initial capital that is deposited is only 100 Pounds only (if in Rupiahkan ya approximately USD 1.5 Million). Usually brokers set a minimum deposit above the 1 lot price. There are some brokers that set a minimum account opening of US $ 250 or even US $ 500. What is the point? Yes! True, to hold the position if it turns out the price moves against Rama's position. Well suppose Rama start his investment with US $ 250. 100 pounds (equivalent to US $ 196) is used as a guarantee of Open Buy positions that he does. Then the rest of the funds to be 250 - 196 = US $ 54. Fund 54 Dollar is used to maintain the position of open Rama if it turns out the price moves down, not up as expected Rama. In the forex market is usually based currency used is US Dollar. That means all transactions will be converted into USD and everything listed on the platform is already in Dollar. The question now, with the remaining 54 dollars, how far away can Rama maintain its position? And what happens if the price moves down and the 54 Dollars runs out?
Good question.
The answer to the first question, Rama can maintain its position until the price moves down as far as 54 points because basically 1 point GBPUSD price is 1 Dollar. So if the price falls to 1.9546, then the rest of Rama's 54 dollars will run out. Then what will happen? If the remaining funds of Rama 54 dollars are exhausted then the open position of Rama will be closed automatically by the system due to no longer a guarantee in the opening position. That way, Rama suffered a loss of 54 dollars and now his funds only remaining US $ 196. Poor Rama ....
The natural situation is called the margin call. Margin call is the closing of positions automatically by the system due to the end of the guarantee of funds owned. An unpleasant thing for a trader. Nightmare to be precise. Well now that the question how long margin call that occurred with the remaining funds only 54 Dollar? The GBPUSD couple are an energetic couple who love to move around. With its volatility, GBPUSD can usually move up to 100 points per day. So, Rama could have a margin call and lose $ 54 in just 1 day!
Yeah a wonderful day to talk about risk and profitability. How big the risks that may occur if I invest forex? Is it with profit? As a professional investor you should learn to see all the investment schemes not always from profit. There are many other factors besides the wonderful dream of profit you should know and one of them is the so-called risk. Forex is an investment that is classified as high risk-high return investment program. That means it is an investment that has a high risk. But also high profit returns. Yes worth the risk. Well, these two sides of profit and risk can not be separated from each other. It's like a side of a coin. There is however across. Crossed yet there. Ok then let's start talking about these two things. If so because I am an umbrella before the rain, I will discuss the risk side first. Hope this cheerful day does not become a gray day after you read this article. Broadly speaking, there are three main things you need to know before starting your forex investment mainly from risk issues.
First, total loss possibility (this means the possibility of overall loss) can reach 90% of all funds you invest. Uh, what? 90%? Not so good as it sounds. Yes it is not so good. But remember this is the worst possible possibility. Why it can reach 90%, this is due to the god helper we used to know called margin trading. Well not a god help anymore dong ...
For example, Rama buys as much as 1 GBPUS lot on the GBPUSD pair at 1,9600. In the case when the GBP strengthens against the USD, then Rama will benefit. Now what if the opposite happens? What if the price moves down? To what extent did Rama's position survive?
In the forex trading market even though you can open as many as only 1 lot and require a guarantee of only 100 pounds, does not mean the minimum initial capital that is deposited is only 100 Pounds only (if in Rupiahkan ya approximately USD 1.5 Million). Usually brokers set a minimum deposit above the 1 lot price. There are some brokers that set a minimum account opening of US $ 250 or even US $ 500. What is the point? Yes! True, to hold the position if it turns out the price moves against Rama's position. Well suppose Rama start his investment with US $ 250. 100 pounds (equivalent to US $ 196) is used as a guarantee of Open Buy positions that he does. Then the rest of the funds to be 250 - 196 = US $ 54. Fund 54 Dollar is used to maintain the position of open Rama if it turns out the price moves down, not up as expected Rama. In the forex market is usually based currency used is US Dollar. That means all transactions will be converted into USD and everything listed on the platform is already in Dollar. The question now, with the remaining 54 dollars, how far away can Rama maintain its position? And what happens if the price moves down and the 54 Dollars runs out?
Good question.
The answer to the first question, Rama can maintain its position until the price moves down as far as 54 points because basically 1 point GBPUSD price is 1 Dollar. So if the price falls to 1.9546, then the rest of Rama's 54 dollars will run out. Then what will happen? If the remaining funds of Rama 54 dollars are exhausted then the open position of Rama will be closed automatically by the system due to no longer a guarantee in the opening position. That way, Rama suffered a loss of 54 dollars and now his funds only remaining US $ 196. Poor Rama ....
The natural situation is called the margin call. Margin call is the closing of positions automatically by the system due to the end of the guarantee of funds owned. An unpleasant thing for a trader. Nightmare to be precise. Well now that the question how long margin call that occurred with the remaining funds only 54 Dollar? The GBPUSD couple are an energetic couple who love to move around. With its volatility, GBPUSD can usually move up to 100 points per day. So, Rama could have a margin call and lose $ 54 in just 1 day!
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