Foreign exchange—commonly known as forex or FX—is the global marketplace where currencies are bought and sold. With an average daily turnover of $9.6 trillion in April 2025 according to the Bank for International Settlements (BIS) Triennial Central Bank Survey[reference:0][reference:1], it is the largest and most liquid financial market in the world. This guide explains apa itu forex dan bagaimana cara kerjanya in plain language: what forex is, how it works, who participates, what drives currency prices, how to evaluate opportunities, and—most importantly—the risks every participant should understand.
Forex (a contraction of foreign exchange) refers to the global, decentralised over-the-counter (OTC) market where currencies are traded[reference:2]. Unlike stock exchanges that operate in a single physical location, forex trading takes place electronically via a network of banks, brokers, and financial institutions around the world. It runs 24 hours a day, five days a week, following the sun across major financial centres from Sydney to Tokyo, London, and New York.
In the forex market, currencies are always traded in pairs. When you buy one currency, you are simultaneously selling another. For example, the EUR/USD pair represents the euro against the US dollar. The first currency (EUR) is the base currency, and the second (USD) is the quote currency. The exchange rate tells you how much of the quote currency is needed to buy one unit of the base currency.
ⓘ Key terms: Bid is the price at which you can sell the base currency; ask is the price at which you can buy it. The difference between bid and ask is the spread, which represents the broker's compensation[reference:3][reference:4].
According to the BIS 2025 Triennial Survey, the US dollar remained dominant, being on one side of 89.2% of all FX trades, followed by the euro at 28.9% and the Japanese yen at 16.8%[reference:5].
At its heart, forex trading is about speculating on currency price movements. You take a position—long (buy) if you expect the base currency to strengthen, or short (sell) if you expect it to weaken—and you profit or lose based on how the exchange rate moves.
The spread is the difference between the bid and ask prices, and it is one of the primary ways brokers earn revenue. A pip (percentage in point) is the smallest price move in a currency pair, typically the fourth decimal place for most pairs (e.g., 0.0001). For pairs involving the Japanese yen, a pip is the second decimal place.
Forex brokers offer leverage, which allows traders to control a large position with a relatively small amount of capital—called margin. For example, with leverage of 1:100, a $1,000 margin can control a $100,000 position. While leverage amplifies potential gains, it equally amplifies potential losses[reference:6]. The CFTC notes that most OTC forex customers lose money when all fees and financing charges are factored in[reference:7].
⚠ Warning: High leverage is one of the biggest risk factors in retail forex. A small adverse move can wipe out your entire margin deposit. Many seasoned traders use leverage conservatively—often below 10:1 for swing trades[reference:8].
When you trade forex through a retail broker, you are typically trading over-the-counter (OTC), meaning you are not trading on a centralised exchange. Instead, your broker is your direct counterparty[reference:9]. This is a crucial distinction: the broker sets the prices you see, and when you buy, the broker is the seller; when you sell, the broker is the buyer. The broker profits from the spread and from your trading activity.
The forex market is made up of a diverse range of participants, each with different objectives and time horizons.
Central banks—such as the US Federal Reserve, the European Central Bank, and the Bank of England—influence currency values through monetary policy, interest rate decisions, and direct market intervention[reference:10]. Their actions can cause significant volatility.
Commercial banks are the largest players in terms of volume. They facilitate currency transactions for their clients and act as market makers, providing liquidity to the market[reference:11].
Multinational companies use forex to hedge against currency risk when they operate in multiple countries. For example, a US company with revenues in euros may sell euros forward to lock in exchange rates.
These institutional players trade large volumes for profit and portfolio diversification. They often use sophisticated strategies and significant leverage[reference:12].
Individual traders like you and me comprise a small fraction of total volume but are a growing segment. Retail forex trading is available through online brokers and platforms.
The BIS 2025 survey highlighted that inter-dealer trading accounted for 46% of global turnover, while trading with "other financial institutions" (including hedge funds and proprietary trading firms) reached $4.8 trillion per day—35% higher than in 2022[reference:13].
Forex serves multiple purposes, from facilitating international trade to speculative investment. Below are the primary use cases.
Businesses that import or export goods and services need to convert currencies. A European car manufacturer selling vehicles in the US, for instance, receives dollars and must convert them to euros to pay its domestic expenses. Forex markets provide the mechanism for these conversions.
Corporations and investors use forex instruments—such as forwards, futures, and options—to protect against unfavourable exchange rate movements. A UK-based investor holding US stocks, for example, may hedge the GBP/USD exchange rate to protect the value of their investment in sterling terms.
Many participants trade forex purely for profit, speculating on whether a currency will appreciate or depreciate. Retail traders, hedge funds, and proprietary trading firms all engage in speculative forex trading. The BIS survey showed that FX spot turnover increased by 42% and outright forwards rose 60% between 2022 and 2025, reflecting strong speculative and hedging activity[reference:14].
Central banks hold foreign exchange reserves to manage their currency's value and to intervene in markets when necessary. They may buy or sell their own currency to influence inflation or trade balances[reference:15].
📍 Scenario: A US Importer Hedging Currency Risk
A US-based electronics company agrees to pay €5 million to a German supplier in three months. The current EUR/USD exchange rate is 1.1000. If the euro strengthens to 1.1500, the company will pay $5.75 million instead of $5.5 million—a $250,000 loss. To lock in the current rate, the company buys a forward contract at 1.1000, ensuring that regardless of where the exchange rate moves, they will pay exactly $5.5 million in three months. This is a classic hedging use case.
Before engaging in forex trading, it is essential to evaluate the opportunity systematically. The CFTC and NFA provide robust guidance for conducting due diligence[reference:16][reference:17].
| Feature | Forex (OTC) | Stocks (Exchange) | Commodities (Futures) |
|---|---|---|---|
| Market hours | 24 hours, 5 days/week | Exchange hours only | 24 hours (varies by exchange) |
| Leverage available | High (often 50:1 or more) | Typically 2:1 to 4:1 | Moderate (10:1 to 20:1) |
| Counterparty risk | High (broker is counterparty) | Low (central clearing) | Low (central clearing) |
| Regulatory oversight | Variable by jurisdiction | Strong (SEC, FINRA) | Strong (CFTC, NFA) |
| Transparency | Lower (OTC) | High (exchange prices public) | High (exchange prices public) |
Source: CFTC, NFA, and FINRA investor education materials[reference:23][reference:24]. Verify current rules and fees with the relevant authority or your broker.
Forex trading carries a high level of risk and may not be suitable for all investors. The CFTC has stated that two out of three retail forex customers lose money when all costs are factored in[reference:30]. You should never trade with money you cannot afford to lose. This is not financial, legal, or tax advice. Always consult with qualified professionals and verify current rules, fees, spreads, rates, broker availability, and platform terms with the relevant authority or provider.
A stop-loss order automatically closes a position when the price reaches a specified level, limiting your loss[reference:33]. This is one of the most important risk management tools.
A take-profit order closes a position when it reaches a specified profit level, locking in gains and removing emotion from the decision[reference:34].
Risk only a small percentage of your account on any single trade—many professionals risk no more than 1–2% of their capital per trade.
Research your broker thoroughly. Use the NFA BASIC system to check registration and disciplinary history[reference:35]. Confirm registration with the CFTC before committing funds[reference:36].
The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) provide extensive investor education materials. The CFTC's "Eight Things You Should Know Before Trading Forex" advisory encourages potential investors to thoroughly research an OTC forex dealer before making any deposits or sharing personal information[reference:37]. The NFA publishes "Trading Forex: What Investors Need to Know", which describes how the retail forex market operates, the risks involved, and how the market is regulated[reference:38]. The Financial Industry Regulatory Authority (FINRA) also offers investor resources that explain complex products and fraud risks[reference:39].
For official data on market size and structure, the Bank for International Settlements (BIS) Triennial Central Bank Survey is the authoritative source. The 2025 survey collected data from more than 1,100 banks across 52 jurisdictions[reference:40]. Readers are encouraged to consult the BIS website directly for the latest data and methodology.
Disclaimer: The information provided in this article is for educational purposes only. It does not constitute financial, legal, or tax advice. Always verify current rules, fees, spreads, rates, broker availability, and platform terms with the relevant authority or your provider before making any trading decision.