I am of opinion that if i am too stern about anything, they will start lying or hiding things/matters from me which is worse
I see what you mean, but it seems to me that you're retreating before it's even come to a battle, because you're afraid of possible consequences. Generally speaking, I think that in parenting, this is unwise. Deal with the consequences when you actually have proof that they manifest themselves; don't retreat prematurely.
and they speak them at home. I never [...] stop them using those words.
In my opinion, you should. This is your home. As a parent, you have a say in how people speak in your home. Make it clear to them that using these words at home is unacceptable to you.
started creating their own secret language, and they have all kinds of corresponding words in that language which i don't want them to speak in English.
Okay, I think this is seriously cool. I'm sorry, but if my kids invented their own secret language with secret cuss words, I'd be impressed and amused. Ask yourself why you find invented cuss words so problematic. They're invented words which only make sense to your two children. Why is this a problem?
What is the best way to stop them using those words in any language and make them truly realize those words are bad?
I don't agree with your premise. I don't think any words are bad. Words are a means to an end; we use them to communicate. Words can be disrespectful, or inappropriate, or hurtful, but I don't think they're bad.
It's totally okay if you don't want certain words used in your presence, and it's important to teach your children that if they use certain words in certain contexts, they will tell other people something about themselves, their upbringing and their social standing. You can discuss this with them. Requiring your kids not to use certain words at home because they're inappropriate teaches them that there are contexts in which they have to watch their language. They will carry this skill over to other contexts later on.
But if I were you, I wouldn't try to make words "bad". I speak differently in different social settings, and I use words in some settings that I won't use in other settings. I don't speak the same way to my wife and kids that I speak with my male friends, and I use yet another language when I speak with students. When I was in the army, my language was much rougher than in all the other social settings. It's true that I use some cuss words very sparingly because I think they're inappropriate in pretty much every situation I find myself in, but I never thought of them as "bad" words. If you tell your kids that certain words are never to be spoken, you tell them that these different social situations don't exist, and IMO that's a bad idea because your kids will notice the world works differently all by themselves, and trust you a little less after that.