Foreign exchange, English is ForexTrading, Foreign exchange transactions refer to investors differently through buying and selling currency between Exchange rate difference To obtain a way of transaction.
There is a measuring relationship between currency in different countries (or regions).For transactions between different countries or regions, different currencies need to be redeemed, which is the most basic foreign currency exchange process.The principle of foreign exchange transactions is to predict the trend of exchange rate changes between different currencies, buy or sell currency, and obtain the benefits of exchange rate differences.
Foreign exchange transactions are one of the largest and most active financial markets in the world.The currency involved includes Dollar As well as EUR As well as JPY As well as GBP The main currency, also includes some smaller currency pairs.The main participants of foreign exchange transactions include banks, large multinational companies, investment institutions, and individual investors.
The risk of foreign exchange transactions is high, and investors need to have certain market analysis capabilities and risk control capabilities.At the same time, due to the opening of the foreign exchange trading market 24 hours, investors also need strong time management and psychological quality.
With the maturity and expansion of the financial sector, and the growth of network electronic transactions, foreign exchange has also begun to appear different from the original transaction purpose, becoming an investment product.However, because foreign exchange transactions are a kind of leverage investment, investment needs to be cautious.
What are the important information about foreign exchange transactions?This article will explain it in detail for you.
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Directory of this article
- What is foreign exchange transaction?
- What is currency right?
- What is a point in foreign exchange transactions (PIP)?
- What are the types of foreign exchange transactions?
- How to trade foreign exchange? How to make money from foreign exchange?
- What are the US foreign exchange trading platforms?
- Foreign exchange trading time
- What are the foreign exchange trading strategies?
- Is foreign exchange transaction risks great?Is there a greater risk compared with stock transactions?
- common problem
What is foreign exchange transaction?
Foreign exchange(( ForexTrading) Frequently and with Foreign exchange exchange(( ForeignExchaange) Confusion, the following is the two from the two the difference The
A.Foreign Exchange
Foreign Exchange is the basic function of foreign exchange.It is a process of converting one currency into another for various reasons.Generally, the exchange of physical currency is designed.
For example, when you come to the United States for the first time from China, you may need to exchange some US dollars in advance to facilitate your trip in the United States.
It is usually used for commercial, trade or tourism, or by banks or individuals to obtain differences profit profits by buying currency with appreciation value for money sold.
B.Forex Trading
Forex Trading is the name of the financial field.During the transaction process, it is generally not converted to the purpose of currency physical objects.Instead, it is a venue for foreign exchange transactions for foreign exchange markets for foreign exchange markets.
Forex Trading is different from the stock market that has physical trading venues.The foreign exchange market is an electronic trading platform worldwide.The global network market composed of major banks and other financial institutions in various countries is one of the most active markets in the world.The transaction volume is as high as $ 5 trillion, which is much higher than the total value of the US stock market.
When conducting foreign exchange transactions, investors conduct transactions in the form of currency against (Currency Pair), that is, selling a currency while buying a currency.
Each currency pair is listed in the form of three letters.This code consists of the letters in the country or region of the two representatives of the currency and the letter of the currency itself.For example, USD represents the US dollar ( U nited S tates D Ollars), GBP represents the pound and JPY represents the yen.
What is currency right?
Currency, English is CurrencyPair Essence
For example, the currency pairs appear in the form of “pound/dollar”.in,
- The first currency (before “/”), that is, the pound here, is called the basic currency, which is the currency that traders want to buy;
- The second currency (after the “/”) is the US dollar, which is the quotation currency, that is, the currency to be sold.
For example, the transaction price of the British/USD unit is 1.35361, and it means that if you want to buy/get 1 £ 1, you need to sell/pay $ 1.35,361.
Basic currency value is usually 1, which is conducive to traders intuitively understanding the amount of local currency amount they need to pay.
At present, the foreign exchange trading market is different from the transaction volume, and there are four types of currency pairs:
1.Main currency pair
The main currency pair is the crime of currency with the United States as the main currency.
At present, the main currency is: euro/USD, USD/yen, pound/USD, Australian dollar/USD, USD/Canada, USD/Swiss franc and New dollar/USD, which account for 75%of global foreign exchange transactions.
2.Secondary currency pair
The trading frequency of secondary currency pairs is low, and these currencies are characterized by non -US dollars.Including: euro/pounds, euro/Swiss francs, pound/yen.
3.Foreign currency pair
Foreign currency pairs are a major currency pair from small or emerging economies.Including: USD/Polandzeli, British pound/Mexican peso, euro/Czech Credit, and so on.
4.Regional currency pairs
Regional currency pairs refer to the currency pairs in a certain geographical area, such as the euro/Norwegian Curden currency pair in the Naavia region, or the Australian dollar/New Zealand meta currency pair in the Australian Laishi region.
What is a point in foreign exchange transactions (PIP)?
The full name of PIP is Percentage in Point, or Price Interest Point, referred to as “point” in Chinese.It means the smallest unit that can fluctuate in the currency to, that is, the basic unit of exchange rate changes.PIP can be used to measure the trend.
In most currency pairs, the currency points are sometimes stipulated that the decimal point of the currency pair is fourth.For example, EUR/USD rose from $ 1.35,361 to $ 1.35,371, indicating that it moved a “point”.
If the quotation currency is a currency with a very small face value, such as the yen JPY, the second place after decimal point, such as Eur/JPY appreciated from ¥ 172.119 to ¥ 172.129, then it moved a point.
In foreign exchange transactions, the “difference” is the difference between the purchase price and the selling price of the foreign exchange.For example, if EUR/USD’s buying price is 1.7645 and the selling price is 1.7649, the point difference is 4 points.The point difference will be different due to different dealers.
What are the types of foreign exchange transactions?
There are three main types of foreign exchange transactions:
- Future foreign exchange
- Long-term foreign exchange
- Futures foreign exchange
1.Period foreign exchange
The English foreign exchange English is Spot Exchange Transactions, which also becomes spot foreign exchange.It is a physical exchange between currency pairs.One of the parties in the transaction will deliver the agreed currency amount to the other party and receive the specified number of specified quantities at the appointment exchange rate.Currency settlement.
The spot foreign exchange market is a place where currency transactions are traded.
The proportion of spot foreign exchange in foreign exchange transactions is the largest, because spot foreign exchange provides “basic” physical assets for the other two foreign exchange transactions.
The price of the currency in the spot market is determined by supply and demand.The influencing factors include the current interest rate, economic performance, and the current political situation involved in the country.
2.Long-term foreign exchange
The English foreign exchange English is Forward Exchange Transaction.
Long-term foreign exchange is the consent of both parties to the trading.It is easy to conduct foreign exchange transactions at the time of designated currency, amount, exchange rate, and delivery time.
Such transactions often appear in international trade.In order to reduce the risk of foreign exchange, exporters with long-term foreign exchange income signed contracts to sell long-term foreign exchange contracts.At the time of expirationLosses suffered due to the decline in exchange rates.
Similarly, importers with long-term foreign exchange expenditures can also sign a long-term foreign exchange contract with banks.At the time of expiration, they can buy foreign exchange at the contract price to prevent the rising exchange rate and increase costs.
Banks’ quotations for long-term exchange rates are usually the difference between long-term foreign exchange rates and right-term foreign exchange rates.The difference may be negative differences or positive differences after the long-term expires.As a result, the long-term exchange rate may be higher than, or it may be lower than the future exchange rate.
3.Foreign exchange futures
The English of foreign exchange futures is Forex Futures.
Foreign exchange futures contracts are on the exchanges, such as the Chicago Futures Exchange ( CBOT), The standardized contracts performed are futures contracts that use exchange rates as the subject matter to avoid exchange rate risks.
In the United States, the National Futures Association ( NFA), Responsible for supervising the futures market.The content of foreign exchange futures contracts contains specific transaction details, including target trading exchange rates, the number of trading units, the date of delivery and settlement, and the minimum price increment that cannot be customized.The exchange as a trader’s opponent provides liquidation and settlement.
At the time of maturity, the two parties can be settled in cash on relevant transactions, and futures foreign exchange contracts can also be traded before maturity.
Futures foreign exchange is regulated by the exchange, so large international companies usually use foreign exchange futures contracts to hedge future exchange rate fluctuations, but speculators may also participate in these markets to earn benefits.
How to trade foreign exchange? How to make money from foreign exchange?
Before the emergence of Internet transactions, it was difficult for individual investors to conduct foreign exchange transactions.Most foreign exchange traders are large multinational companies, high net worth individuals or hedge funds, because foreign exchange transactions require a lot of funds.
The development of Internet technology has set up many online trading platforms.With the help of these platforms, some secondary markets allowing individual traders to conduct foreign exchange transactions have appeared.Establish a secondary market through banks or brokers, so that retail investors can easily enter the foreign exchange market.
Most online brokers or dealers provide individual investors with a very high-power leverage transaction, allowing investors to control large transactions with small funds and obtain high benefits, but at the same time, they also bear great risks.
Before the personal investor is preparing to enter the foreign exchange market and during the transaction, you need to pay attention to:
1.Understand foreign exchange knowledge
Although the principle of foreign exchange transactions is not complicated, it still has many tricks and key information choices in the investment process, and requires professional knowledge.For example, the leveraged magnitude of foreign exchange transactions is higher than the influencing factors of the changes in stocks and exchange rates are different from the stock market, and how to calculate the profit of foreign exchange transactions.
2.Open a personal account
Investors need to open a foreign exchange trading account at a brokerage company.
Generally, online brokers do not charge commissions, but earn benefits through foreign exchange points.
Different online brokers will have different requirements for investors’ initial investment amounts.For junior investors, it is a better choice to choose a lower initial amount requirement.
3.Formulate trading strategy
Understanding the knowledge of foreign exchange and learning market analysis, formulating an effective strategy suitable for your own investment style is the best way to avoid risks during the transaction process and earn rewards.In the discussion, no matter what, investors should consider reducing risks first.& nbsp;
4.Master account information
Once a transaction starts, be sure to check your account when the transaction is over every day, because the foreign exchange market is different from the stock, etc., and the foreign exchange transaction is continuously carried out for 24 hours in all the provisions of specific transactions.
This means that when the investor ends the transaction on the day of the day and does not close the position or close the transaction in time, it may occur during the departure period.Of course, it is possible to get a return.Good habit.
5.Maintain a good attitude
The process of foreign exchange transactions is often full of rolling rollering and falling.When the worst situation occurs, whether it can be calm and decisively choose to add or stop loss.It is a compulsory course for beginners.Investors are the qualities that must have.
Many beginners are prone to large losses, but when they calm down and analyze, they often conclude that “it should not be like this just now”, but foreign exchange does not regret the medicine as any investment.It is the ability that all investment stages should have.
After understanding the process and necessary conditions of foreign exchange transactions, how does foreign exchange transactions benefit?The principle is indeed very simple, that is, the difference between the rise and fall of the currency and the difference between the sales and buying points provided by the broker.
Dealers or banks will provide the current target currency-paired selling price (Sell Price) and Buy Price.
6.Buy
Buying can also be called as much.
For example: EUR/USD’s current current is 1.07170/1.07190.If investors think that the euro will rise, so it is decided to buy the euro now and buy it at a price of 1.07191.
If the euro rises, when its price rises to 1.07370/1.07390, the investment will rise by 20 points.If the current decision is decided, the price of 1.07370 is sold and earned 18 points of return.Two points of commissions are charged during the transaction.
7.Sell
Selling is also called short.
If investors think that the euro will fall, it will decide to establish a single inch of the euro, that is, selling holdings.Because it is selling, the price is 1.07170, and then the euro has risen, reaching 1.07370/1.07390.The actual loss of 22 points, of which the difference between the 2 o’clock is the commission charged by the dealer or the bank to set up a sales difference.Essence
It can be seen that due to the difference between the selling price and the purchase price of foreign exchange transactions, the income and losses are not 1: 1, and this part of the point will be different according to different brokers, and it will directly affect the income of investors.
During the transaction, investors do not need to pay all investment in full, but pay a certain percentage of margin (Margin) for transactions.When liquidating, earn the corresponding proportion of the funds of the corresponding proportion or the corresponding proportion of the corresponding proportion.It has a leverage effect.Essence
What are the US foreign exchange trading platforms?
The online brokers that can conduct foreign exchange trading in the United States include TD Ameritrade, Ally Invest, and Interactive Broker, as well as several other famous brokers or banks.
IG
IG foreign exchange transaction
IG, named IG Group, was founded by Stuart Wheeler in 1974.It is the first foreign exchange point trading company in the world.It is part of IG Group Holdings PLC.Ig Group Holdings PLC is a public-traded enterprise group.It is in London London London.Securities exchange code: IGG.
IG Group officially entered the US market in early 2019.Support users with a difference of 0.59 to support foreign exchange investment for multiple currency pairs.IG adopts the company’s concept of “either to be bigger or going back”, with low cost, values of customer service and education, operating research, and functional user interface.Powerful competitiveness.IG Group was rated by InvestedOpeDia as the best foreign exchange broker in 2020 American traders.
Shengbao Bank
Founded in 1992, Shengbao Bank operated a number of regulatory banks and obtained permission in six first-level judicial regions, making it one of the safest agents of trading foreign exchange and difference contracts.
Shengbao Bank is an exclusive broker that requires the minimum deposit of $ 10,000 to open an entry-level account.Shengbao Bank’s platinum and VIP accounts need $ 200,000 and $ 1,000,000, respectively.
Shengbao Bank is exempted from commissions, and 182 foreign exchange pairs can be traded with a difference of 0.4 points.When investors’ monthly transactions are less than $ 50,000, they need to pay an account fee of $ 3 a month.
Shengbao Bank is committed to “Global Guidelines for Foreign Exchange”*, This is an inter-bank standard that is constantly optimized around the disclosure and implementation of the best delivery of information to promote the integrity and transparency of the global foreign exchange market.
*Global Guidelines for Foreign Exchange – FX Global Code:
It was introduced in August 2018.It is a global principle of good practice in the foreign exchange market.It aims to provide a set of general guidelines to promote the integrity and effective operation of the foreign exchange wholesale market.It was developed by central banks and market participants from 16 jurisdictions around the world.The purpose of the global codes is to promote a strong, fair, flow, openness, and appropriate and transparent market.In this market, the diverse market participants can use the support of elastic infrastructure, which can reflect the competitive price of the available market with competitive prices.Confident and effectively carry out information to provide information in accordance with acceptable behavioral standards.Global Code will not impose laws or regulatory obligations for market participants, nor will they replace supervision.Instead, it aims to supplement all local laws, rules and regulations by determining good global practice and processes.
CMC Markets
CMC Markets was established in 1989.It is one of the most secure agents in the four first-level judicial areas and two secondary jurisdictions.
CMC Markets is a leader in low-cost transactions, providing foreign exchange trading costs significantly lower than the industry average.
The launch of the Next Generation platform provides a large number of choices for nearly 10,000 trading tools.With advanced tools, comprehensive market research and excellent mobile applications, it provides excellent user experience.It only takes three steps to open the account for free.
When the monthly transaction volume of investors exceeds $ 25 million, CMC Markets provides a liquidity rebate of $ 5 million per million US dollars per million dollars.For investors with a monthly transaction volume of more than $ 300 million, up to a maximum of per million per million per millionUSD 10 $ 10.The average point difference for general users is 0.74 points, and the total cost of the highest level users is 0.64 points.
Foreign exchange trading time
The biggest difference between foreign exchange and other financial investment products is the transaction time.Unlike trading in a center, there is a fixed transaction time.The trading time of foreign exchange is mainly distributed in four major foreign exchange trading centers in different time zones: London, New York, Sydney, and andTokyo.
Because there are no concentrated trading venues, 24 hours a day, foreign exchange transactions have been continued in different regions of the world.
In the United States, the main time of investors’ transactions is: 5 pm on Sunday in the Eastern Standard time of the Eastern United States, to the Eastern Standard time at 4 pm on Friday.
However, because the foreign exchange market is carried out all over the weather, investors cannot trade around the weather.
This means that there may be differences between foreign exchange prices between the close and opening on Sunday.Investors need to pay attention to foreign exchange trading hours on weekends and change their positions accordingly.
Also, global The opening of the foreign exchange market will be different in March, April, 10th, and November, because countries change the summer time on different days.
What are the foreign exchange trading strategies?
The formulation of transaction strategies is a very important link in the process of foreign exchange transactions, which will directly lead to the transaction and stop, which will affect the income or loss of investors.
For novice traders, you can first understand several types of basic foreign exchange trading strategies.
1.Follow the trend
Using foreign exchange transaction technology analysis tools to identify market trends, that is, the direction of market movement, or more accurately, is the fluctuation trend of the foreign exchange market, because the foreign exchange market is not a linear movement, but continues to fluctuate, with obvious peaks and troughs.
Analyzing the situation of the peak trough, you can understand the trend of the foreign exchange market, mainly in the upward trend, downward trend, and stable trend.
In response to these three types of trends, most general investors will take purchase, sell and wait and see.
2.Breakthrough transaction
Breaking transactions is one of the simplest strategies in foreign exchange transactions, and it is also a good choice for beginners.
“Breakthrough” refers to changes in price outside the support level or resistance.The support level refers to the rebound of the price when the price fell to a certain point.The resistance level refers to stopping the rise when the price rose to a certain point and began to fall.
When the price rises exceeds the resistance area, a breakthrough may occur, called the “bullish” breakthrough mode.When the price falls below the support area, it is called the “falling” breakthrough mode.
Regardless of the model, breakthrough means that a new round of market fluctuations may begin.Investors can join the transaction, and they can use the new trend to use volatility as the advantage of investors.
3.Interval transaction
Division transactions and breakthrough transactions are just the opposite, which is traded in a relatively stable interval.Its profit is that the price is usually kept within a stable and predictable range in a certain period of time.Investors use price judgments to make short-term transactions to obtain returns.
4.Fundamental analysis
In fundamental analysis, traders will judge whether the value of the local currency is undervalued or overestimated by looking at the economic base of a country, and predicts the future trend of this currency to another currency.
Fundamental analysis is sometimes complicated, involving many factors in a country’s economic data.These factors can show future trade and investment trends.Experienced investors will simplify it by focusing on several main indicators, including GDP, GDP, inflation data, and housing data.
5.arbitrage transaction
Arbitrage transactions are investment strategies that investors use interest rate differences between countries to profit.Investors using arbitrage transactions will “borrow” low interest rate currencies to purchase higher interest rate currencies.
Arbitrage transactions are one of the most popular trading strategies in the foreign exchange market, but there are still certain risks.For example, such transactions are usually high, which leads to a full of people and limited liquidity.
Is foreign exchange transaction risks great?Is there a greater risk compared with stock transactions?
Foreign exchange transactions are as affected by many risk factors as any transaction.In addition to the impact of the economic conditions and political situations of currency holding the country, there are also some influencing factors during the transaction process.
A.Lexal transaction
The biggest risk of foreign exchange transactions is its leveraged transaction model.Prose investors are allowed to enter the market with a lower amount of investment amount, and conduct a high-magnification foreign exchange transaction.Although the return rate is considerable, the risk is alsoIncreasingly increased, it will even cause investors to lose all the initial funds.Learning to manage risks is particularly important for foreign exchange transactions.
B.Trading object
In the foreign exchange market, the trading target of the currency pair in the hands of investors is their own agent, which means that investors’ trading opponents are agents.The main risk of this is that once the broker goes bankrupt, it is impossible to complete the subsequent payment income.So, investors should not only ensure that they cooperate with licenses and regulatory agents, but also consider the financial strength of the agent.
C.Compared with stocks
The transaction time of foreign exchange is 24 hours uninterrupted, which makes investors unless they have enough risk management and control capabilities, or when the transaction is completed, it may be affected by the market at any time.The stock market of fixed transactions does not exist.
In terms of market volatility, foreign exchange is far more influential than the stock market, which makes its volatility is also greater than the stock market.It may be a good thing for transactions, or it may be a bad thing.
In terms of market transparency, foreign exchange is a global market, and there is no specific institution to forcibly implement information disclosure, which makes the transparency of the foreign exchange market is not as good as the stock market.Therefore, it is more likely to occur in the foreign exchange market.Real information causes investors to suffer losses outside.
In terms of scattered risks, foreign exchange has a certain advantage over stocks.Due to the high liquidity of foreign exchange, there will be no unable to sell in the stock market.Once the risks are performed, the operation can be immediately executed to stop loss.
common problem
Question 1: What is foreign exchange transaction?Forex trading English is: Forex Trading, or Foreign Exchange.However, the two translations are different in meaning.
Foreign Exchange is the basic function of foreign exchange.It is a process of converting one currency into another for various reasons.Generally, the exchange of physical currency is designed.
Forex Trading is the name of the financial field.During the transaction process, it is generally not converted to the purpose of currency physical objects.Instead, it is a venue for foreign exchange transactions for foreign exchange markets for foreign exchange markets.
See More
The online brokers that can conduct foreign exchange trading in the United States include Interactive Broker, TD American, and Ally Inves, as well as several other famous brokers or banks, such as IG, SAXO Bank, and CMC Markets.
See More
In the United States, the main time of investors’ transactions is: 5 pm on Sunday in the Eastern Standard time of the Eastern United States, to the Eastern Standard time at 4 pm on Friday.
However, because the foreign exchange market is carried out all over the weather, investors cannot trade around the weather.
This means that there may be differences between foreign exchange prices between the close and opening on Sunday.Investors need to pay attention to foreign exchange trading hours on weekends and change their positions accordingly.
See More
Foreign exchange transactions are as affected by many risk factors as any transaction.In addition to the impact of the economic conditions and political situations of currency holding the country, there are also some influencing factors during the transaction process.
The biggest risk of foreign exchange transactions is its leveraged transaction model.Prose investors are allowed to enter the market with a lower amount of investment amount, and conduct a high-magnification foreign exchange transaction.Although the return rate is considerable, the risk is alsoIncreasing the year-on -year increase will even cause investors to lose all the initial funds.
See More