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Now, let's get started with the first level ("Sitting Duck"). In this first lesson we will learn about investment structure.Generally, the investment or investment object is divided into two sector, the real sector and financial sector. Both these sectors have a long story ahead, although of course the real sector in the first place is a pioneer in the first world investment.
At the age of 70's until the end of the 90's, it's more common to deal with the real sector investment such as property and plantation sectors. However, after the monetary crisis falling, investors started to looking for any other kind of investment which will give big return in the short term. From here on, financial sector started to grow rapidly.
The real sector investments (for example: property) generally require a large capital and take a relatively long time to develop because the size of the capital, so it's not as liquid as financial sector.
We'll take the example when we buy a house for investment. The value is usually not always been decreased and increased. However, on the other side, after several years, if you want to withdraw your investment, then you need to find someone who has adequate funding to purchase your home, the value may have grown up tens to hundreds of percent. Searching for buyers like this one is not easy, this is where liquidity problems occur.
With the financial sector, investment is more liquid, and return a relatively large, comparable with the risk. The advantages are a bunch of investment products offered in this sector.
Then where's the position of Forex Trading? It is in the Money Market & Commodity Exchange Marker. Forex trading is an investment in the financial sector which is one of the most high risk-high return investment. This means, the opportunity to gain even very large to reach hundreds of percent per month, but with the possibility of large losses if not managed properly.
You need to understand the concept of high risk-high return here. Basically, all types of investment have the possibility of loss. The amount of potential losses will be comparable with the size of the potential benefits that can be obtained here. The greater the potential benefits that can be obtained here, then the greater the potential losses that may arise, and vice versa.
If you are classified as safe or conservative investors who do not like risk or 'shock' in your investment portfolio, it seems that any kind of forex trading is not a suitable investment for you. This is because forex trading is an investment that has a very rapid movement in liquidity and in price movements. Logically, forex trading can only take you take advantage of tens to hundreds of percent in one day, but it can also bring you to lose the same amount.
If you are a risk taker or aggressive investor, the forex trading is the type of investment that match with you, which means ready to take advantage, and also ready to bear the potential losses at the same time.
Then, is there way for minimizing the potential loss? Of course there is! Risk management and analysis ability is the key here. The better you run the risk management in analyzing the movement of the market price, the smaller the potential loss that can occur.
