I often get questions from fellow traders: Bung Heze, is it better to play Indonesian stocks or foreign stocks, right? Which one is recommended? My answer is usually simple. If you are Indonesian and live in Indonesia, you should start trying to play Indonesian stocks. And vice versa.
"But Bung Heze, he said foreign stocks (especially the US Stock Exchange) are much more liquid than Indonesian stocks?" Ask your curious
Who said more liquid? However, if you have a statement that the stock exchanges of developed countries, especially the US, are more liquid, this time I STRONGLY AGREE. Why is that? There are several underlying reasons.
First, from the number of issuers, Indonesian companies that go public are very small compared to Singapore, America, China and other developed countries. The minimum number of public companies, of course, affects the liquidity of transactions on the stock exchange. Of the many publicly listed companies in Indonesia, some of them even have poor fundamental performance and are mediocre. So, how do you want to be as liquid as foreign exchanges?
Want to know more technical and practical reasons? Of course, in the Indonesian stock exchange there are not many liquid stocks, because investors only play in well-known stocks (LQ45 and blue chips). So, if you want to play scalping trading on the Indonesian stock exchange, you can stress yourself out.
The lack of liquidity of the Indonesian stock exchange makes it difficult for traders to make stock trading for scalping. In the American stock market you will find it easier to scalp because stock transactions in the US are much more volatile. This is also supported by the large number of overseas stock investors compared to stock players on the Indonesia Stock Exchange.
From my experience playing stocks, I only dare to trade stocks that have clear charts and movement patterns, and are liquid (for example, LQ45 stocks, blue chip stocks and second-tier stocks). Even then, there are only tens of them.
On the Indonesian stock exchange, most of the shares are highly illiquid and a large number of stocks are not traded. The term "famous": Just a name on the Stock Exchange.
Meanwhile, if I look at the position of top stocks at the beginning of the market opening (around 09.05 hours), and I see that there are stocks that have suddenly gone up 7%, it turns out that when I look at the chart, it's a mess. You stock player, definitely understand what I mean.
Does this mean that foreign stock exchanges are more profitable? Ask you
Who says it? You should not be indoctrinated with the words "foreign". Indonesian people when they hear foreign words, the impression is always "wow" really. In fact, abroad is not necessarily good (if in the context of stocks, playing foreign stocks may not necessarily guarantee you can earn more and bigger profits).
What I mean is this, if you don't understand trading, psychological and movement patterns of foreign stocks which tend to be much more liquid and dynamic, it means that you will not be able to profit. What is there, you are stuck.
So, playing Indonesian or foreign stocks comes back to each of you. Whether you want to play "local" or "foreign" stocks, you must continue to hone your trading skills. American stocks are indeed much more liquid than Indonesia's. However, there is no guarantee that playing stocks abroad can be more profitable than playing stocks locally, and vice versa.
