Foreign exchange
Foreign exchange transactions
Foreign exchange transactions
Foreign exchange trading is a method of converting one foreign currency into another foreign currency, that is, buying one currency in a currency combination and selling another currency at the same time. The exchange rate of various currencies in the international market fluctuates frequently, and transactions are carried out in the form of currency pairs, such as the euro against the U.S. dollar (EUR/USD) or the U.S. dollar against the Japanese yen (USD/JPY). Unlike stocks or futures, there is no trading center for foreign exchange transactions, and all foreign exchange transactions are conducted through a data network.
Foreign exchange market
The foreign exchange market is currently the world's largest financial market, with an average daily trading volume of US$6 trillion. From 5 p.m. Eastern time on Sunday to 5 p.m. Eastern time on Friday, the foreign exchange market operates 24 hours a day. Trading starts every day in Wellington, New Zealand. As the earth turns, the business hours of every financial center in the world will start in turn, from Tokyo to London to New York. Unlike other financial markets, during the normal foreign exchange market opening hours, whether it is day or night, foreign exchange traders can respond to market fluctuations at any time.
Advantages of foreign exchange trading
1. Flexible leverage: The leverage ratio provided in foreign exchange transactions is usually 100 times that of stock transactions. In ABCDEFG, you can enjoy a trading leverage of up to 500:1. For example, in the stock market, investors can buy 2,000 yuan in stocks for 1,000 yuan through margin trading and securities lending. And through ABCDEFG, foreign exchange traders can use 1,000 U.S. dollars to obtain 500,000 U.S. dollars in purchasing power. Therefore, foreign exchange transactions are far more effective than stocks with small gains. Investors need to be aware that leveraged trading may amplify risks as well as gains. You can only trade when you have the ability to bear these risks.
2. Two-way trading: In the stock market, if investors want to sell short, they will face many restrictions to profit from the bear market. For example, higher capital requirements, improved quotation rules, and complicated operating procedures. The short-selling mechanism of foreign exchange is very flexible and has no restrictions. Forex traders can freely use the ups and downs of the market to invest and make profits. Take the euro against the U.S. dollar (EUR/USD) as an example. When the EUR/USD appreciates, you can choose to buy; when the EUR/USD depreciates, you can choose to sell.
3. 24-hour trading: The foreign exchange market is a 24-hour global market that never stops. Traders can arrange trading hours according to their own habits. This is one of the reasons why many office workers choose foreign exchange investment. At the same time, more and more people are beginning to use the stock market closed time to trade foreign exchange as an effective channel to diversify investment risks.
4. High liquidity: The foreign exchange market has high liquidity, implements the T+0 system, and is easy to exchange. No matter when and where any news occurs, investors can make immediate trading reactions, and there can also be flexible rules for the time of entry or exit. Compared with the foreign exchange market, the scale and transaction volume of other financial markets are much inferior, such as poor liquidity. For example, in the futures market, it is often difficult to trade, the price is easy to gap, and it is difficult to grasp. The foreign exchange market is always liquid, and transactions can be carried out at any time. The real-time quotation system of foreign exchange can ensure that all market orders, limit orders or stop loss orders are completely traded.
5. Low cost and no commission: The cost of foreign exchange transactions is usually limited to the spread of currency pairs. ABCDEFG does not charge any commissions, and its profit is only obtained from the spread of the quoted price. The spread cost of trading in ABCDEFG can be as low as 1.6 points.
