Foreign exchange trading and foreign exchange market

The foreign exchange market, also known as "Forex" or "FX" market, is the largest financial market in the world, with an average daily transaction volume of more than $65,438+$0.5 trillion-equivalent to more than 30 times of the total transaction volume of all securities markets in the United States.

"Foreign exchange trading" refers to buying one of a pair of currencies at the same time and selling the other currency. Foreign exchange is traded in the form of currency pairs, such as Euro/USD or USD/JPY.

There are two main reasons for foreign exchange transactions. About 5% of daily transaction turnover is due to companies and government departments buying or selling their products and services abroad, or having to convert the profits they earn abroad into their own currencies. The other 95% transactions are for profit or speculation.

For speculators, the best trading opportunity is always to trade the most frequently traded (and therefore the most liquid) currencies, which are called "major currencies". Today, about 85% of daily transactions are in these major currencies, including US dollar, Japanese yen, Euro, British pound, Swiss franc, Canadian dollar and Australian dollar.

This is a real-time 24-hour trading market. Foreign exchange trading starts from Sydney every day. With the rotation of the earth, the business days of every financial center in the world will start in turn, first in Tokyo, then in London and new york. Different from other financial markets, investors in foreign exchange trading can respond to foreign exchange fluctuations caused by economic, social and political events, whether during the day or at night.

The foreign exchange trading market is an over-the-counter (OTC) or "in-bank" trading market, because in fact, foreign exchange transactions are reached by both parties through telephone or electronic trading network. Unlike the stock and futures markets, foreign exchange transactions are not concentrated in one exchange.

Advantages of foreign exchange trading over other investment tools

Powerful lever

The leverage provided by foreign exchange trading is the largest among many investment tools. In Jiasheng Group, customers can operate contracts with a value of 65,438+0,000,000 base currency as long as they invest 65,438+0,000,000 as a deposit.

Free of commission

We won't charge any commission, because the operation of buying and selling doesn't go through manpower.

Finite risk

Your loss will never be greater than the deposit you put into your account, so customers will never owe money. You can also use our stop loss order to control the risk. We guarantee that all stop-loss orders will not slip (applicable to contracts below 1 000,000).

Tradeable quotation

The quotation on the trading platform is a real trading quotation, not a reference price for market transactions. Customers only need to click on the price twice with the mouse to place an order quickly. There are many systems in the market that display the reference price instead of the transaction price, and they will only quote a transaction price to customers after receiving the quotation request. The trading platform provided by Jiasheng is absolutely dominant in this respect, and customers can clearly grasp the price of entering or closing positions. (For contracts with a value of 1, 000,000 or less)

A 24-hour market

Spot foreign exchange market is a perfect market for active traders. Unlike the stock and futures markets, currency trading will not stop, thus ensuring 24-hour uninterrupted trading and giving investors the opportunity to capture every important event. At the same time, the 24-hour uninterrupted feature ensures the minimum market gap risk; In other words, the possibility that the opening price is significantly higher or lower than the closing price is ruled out. In other words, it is impossible to jump high or low because of the 24-hour market.

How to buy and sell

In the foreign exchange market, the exchange rate is the exchange rate of two currencies. All transactions involve buying one currency and selling another at the same time. Simply put, foreign exchange trading is to exchange one currency for another, expecting the market price to change, and buying the currency whose value is expected to rise to make a profit; Instead, sell the currency that is expected to depreciate first, and then buy it to make a profit.

In trading terms, "long" means that investors buy a currency first, hoping to sell it at a higher price later to make a profit, and investors will benefit from the rising market. And short ("short"), that is, investors sell a currency first and expect it to depreciate. In this case, investors benefit from the falling market.

For example, A bought a large amount of (100000) EUR/USD at 1.0020, and the exchange rate dropped to 0.9999, which means that A changed USD into EUR at an unfavorable high price and gained a loss. In the spot foreign exchange market, the exchange rate quotation generally has four decimal places, and the last numerical item is called "point". The value of each point depends on the currency, price and amount of the transaction. The point value of Euro/USD is USD 65,438+00 (USD 65,438+000,000). In the above example, A lost 265,438+0 points, or $265,438+00.

In the foreign exchange market, currencies are usually quoted in pairs, so the result of all transactions is to buy one currency and sell another at the same time. The main purpose of currency trading is to exchange one currency for another, and through the change of market exchange rate or value, the value of the currency you buy is higher than that of the currency you sell.

In quotation, the first currency represents the benchmark currency and is usually set as the standard for buying or selling.

Suppose the current selling/buying price of USD/JPY is 108.02/ 108.07, which means you can buy 1 08.02 JPY with USD or 108.02 JPY. If you think that the dollar is undervalued against the yen, because the dollar is the benchmark currency, you need to buy this pair of currencies to implement this strategy. In other words, you need to buy dollars and sell yen at the same time, and then wait for the exchange rate to rise.

But please note that the currency pair quotation convention is fixed, so if you think that the yen will appreciate against the US dollar, you should sell this pair of currencies.

Like other financial products, foreign exchange quotation also includes buying price and selling price. At any time during trading hours, "buying price" refers to the price that Jiasheng Group is willing to pay for the foreign currency at a given time, while "selling price" refers to the price that Jiasheng Group is willing to sell the foreign currency at a given time. The difference between the buying price and the selling price is called the bid-ask spread. Jiasheng price difference is one of the lowest in the industry.

High leverage and low profit

The margin for foreign exchange transactions is to protect the losses of customers or to have cash as a buffer. Through deposits received, customers can hold positions much larger than the margin value. With the help of Jiasheng Group's foreign exchange trading platform, you can enjoy leverage trading up to 200 times. Jiasheng Group adopts automatic procedures to ensure that customers' losses will not exceed the funds in their accounts. The margin percentage level of the account is recorded in the system. According to the situation of each account, the trading platform of American Jiasheng Group can calculate the funds needed for holding positions (used margin) and the funds available for establishing new positions (available margin) in real time, and display them in the account window together with the balance, net value and real-time calculated profit and loss information. When the account exceeds the maximum allowable leverage ratio, the trading department has the right to close some or all positions in the account. Please pay attention to monitoring the deposit in your account to ensure that you can stop losses independently, especially in the case of large market fluctuations.

Foreign exchange trading quotation

It seems a little confusing to understand the quotation of a foreign exchange transaction. However, if you remember two things, you will find it very simple. 1) The first currency listed is the base currency. 2) Second, the value of the base currency is always 1.

The dollar is the center of the foreign exchange market and is usually considered as the base currency of quotation. Among the major currencies. This includes USD/JPY, USD/CHF and USD/CAD. For these currencies and other currencies, the quotation is expressed as how many currencies are exchanged for each dollar (the second currency in the quotation). For example, USD/JPY quotation 120.0 1 means USD 1 equals JPY 120.0 1.

When the dollar is used as the benchmark unit, the quotation of one currency combination rises, which means that the dollar appreciates and the other currency depreciates. If the USD/JPY quoted above rises to 123.5438+0, then the USD will strengthen, because now you can buy more JPY than before.

The three currencies to which the comparison rules do not apply are the pound, the Australian dollar and the euro. In this case, the quotation you may see is GBP/USD 1.4366, which means GBP 1 equals USD 1.4366.

Among the three currency pairs, the US dollar is not the basic price, and an increase in the quotation means a decline in the US dollar. It just costs more dollars to change a pound or Australian dollar.

In other words, if the quotation of a currency rises, the benchmark currency will appreciate, and the decline in quotation means that the base currency is depreciating.

Currency pairs excluding the US dollar are called cross currency combinations, but the criteria are the same. For example, the euro/yen quotation 127.95. It means that 1 euro is equal to 127.95 yen.

In foreign exchange transactions, you will see bilateral quotations, which consist of buying price and selling price. The bid price is the price at which you intend to sell the base currency (and buy the opposite currency at the same time). The selling price is the price at which you can buy the base currency and sell the opposite currency.

Foreign exchange versus securities

If you are interested in trading foreign exchange online, you will find that the foreign exchange trading market has many advantages over the securities market.

24-hour transaction

Foreign exchange trading is a 24-hour market, which provides a major advantage over securities trading. No matter from 6 pm or 6 am, no matter where in the world, there are always buyers and sellers actively trading foreign exchange. Traders can always react quickly to new news, and their profits and losses will not be affected by profit reports or analysts' suggestions after a few hours.

A few hours later, the American Stock Exchange brought many restrictions. ECN (Electronic Communication Network) is usually called a matching system, which exists to connect the buyer and the seller as much as possible. However, there is no guarantee that any transaction will be executed or the transaction price will be reasonable. In order to get a better spread, it is common for traders to wait until the market opens the next day.

More transparent processes

The volume of foreign exchange trading is 50 times that of new york stock trading. There are always brokers/dealers willing to buy and sell foreign exchange in the foreign exchange market. The transparency of this market, especially those major foreign currencies, will ensure the stability of market prices. Traders always open or close positions at open market prices.

Because of the lower trading volume, investors in the stock market are more vulnerable to changes in transparency risk, which will lead to a wider range of price differences or changes due to any larger transactions.

The leverage ratio is 100: 1

The leverage of 100: 1 usually comes from online cross-trading, and they exceed the usual margin ratio of 2: 1 provided by securities dealers. At 100: 1, the trader shows that the margin of 10000 USD position is 10000 USD, or expressed as 1%.

Although it is certainly not suitable for everyone, this kind of leverage is effective and a powerful tool to make money from the practicality provided by online foreign exchange trading companies. Of course, it is not misunderstood by many people, but the risk burden. In the foreign exchange market, leverage is necessary because the average daily price change of major currencies is less than 1%, but a stock may easily change its price 10% on any given day.

The most effective way to manage risk in margin trading is to learn to follow a conventional trading style, that is, often use stop loss and limit position orders. Be careful to control your feelings in the system operation.

Reduce transaction costs

Judging from the commission and transaction costs, foreign exchange transactions are relatively low in cost. Jiasheng Group does not charge any commission or handling fee; But at the same time, it still provides traders with all relevant market information and convenience of trading tools. On the contrary, the commission for stock trading ranges from $7.95 to $29.95 per online discount brokerage transaction. However, if you trade through a full-service broker, you will be charged a commission of 100 or more per order.

More importantly, it is necessary to consider that in foreign exchange transactions, regardless of the size of the transaction, the density of the bid/offer price difference is usually 5 points or less; (1 point is 0.000 1 minute). Generally, the spread width in foreign exchange trading is smaller than110 in stock trading. Stock trading may contain a spread of 0. 125( 1/8).

A market where potential profits are both rising and falling.

In every foreign exchange trading position, investors are bullish on one foreign exchange and bearish on another. A short position refers to a position in which traders sell foreign exchange when they predict that it will depreciate. This means that the potential profit will potentially be a market that rises and falls together.

Compared with securities trading, there is another obvious advantage that foreign exchange can be sold without any restrictions. In the American stock market, according to the zero-rise rule, investors are not allowed to short stocks unless the price of the previous transaction is soon equal to or lower than the selling price.

Foreign exchange versus futures

The global foreign exchange trading market is the largest and most active financial trading market in the world. The daily trading volume of the foreign exchange market exceeds 65,438+0 trillion US dollars, which is also the most important financial transaction.

Foreign exchange brings more benefits than currency futures trading. The difference between them lies in the development history, customers and the connection with the modern foreign exchange trading market. More specifically, transaction cost, margin, liquidity, simplicity of operation and scientific and academic support provided by suppliers are all different. The following are their differences:

More trading volume = better liquidity. The daily turnover of currency futures is only 1% of the foreign exchange market. Unparalleled liquidity is one of the many advantages of foreign exchange trading over currency futures trading. Any foreign exchange trading professional can tell you that as early as the 1970s, cash was paramount in the modern foreign exchange trading market. Now, in fact, every individual trader with different risk management investments can have the best investment opportunities in the foreign exchange trading market.

The foreign exchange market provides a smaller bid-ask spread than the futures market. As for the USD/CHF example above, the trading price of futures is .5894-.5897, and the market price is 1.6958- 1.6966. The spread of futures is 8 points, while the market price is 5 points.

Compared with futures trading, foreign exchange trading provides higher leverage and lower margin. In futures trading, traders have different daytime trading margins and overnight trading margins. The collection of these deposits is also determined by different transaction amounts. The foreign exchange trading of Jiasheng Group in the United States provides customers with a unified margin, whether it is intraday trading or overnight trading.

The foreign exchange market uses simple and global vocabulary and quotations. The quotation of currency futures is just the opposite of the market quotation. For example, the market price of USD/CHF is1.7100/1.7105, and the corresponding futures quotation is .5894/.5897, which is for futures trading only.

Currency futures prices include foreign exchange forward transactions, and the following factors must be considered: time, interest rate and spread between different currencies. In the foreign exchange market, there is no need to adjust, calculate and use or consider the interest rate of futures contracts.

Foreign exchange transactions conducted through Jiasheng Group are commission-free transactions. Currency futures trading must charge commissions, trading and clearing fees. These charges directly reduce the trading interests of traders.

More different from foreign exchange trading, currency futures are only a very small part of the financial market that has undergone tremendous changes in the past 10 years.

Currency futures contract (IMM contract or international money market futures for short) 1972 was produced in Chicago Mercantile Exchange.

These contracts were established by market professionals, and at that time, their trading volume reached 99% of the entire currency trading market.

Only a small part of currency futures is used by some individual investors for speculation, and the market is mainly manipulated by professionally trained experts.

Currency futures is only a small incidental activity of speculators or risk averse, not the main activity of global currency trading.

This arbitrage opportunity is getting less and less. Even if it appears from time to time, it will be closed by professional traders.

These changes have greatly reduced the number of professionals in currency futures trading, thus reducing the arbitrage opportunities in foreign exchange trading and futures trading. Until today, the trading behavior in the financial market has become more standardized. Today's market operation pays more attention to the profit and loss of currency futures traders, making it a way to guide individual investors out of the maze in the foreign exchange market.

References:

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Interviewee: joy for- Assistant Level 3 1-22 10:38.

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Detailed essentials. thank you

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Comments on the best answer

I am a foreign exchange broker. You can talk to me in detail if you are interested. My QQ number is 1228870 13. What I can tell you here is that the same technical method can also be used to speculate on foreign exchange and argue about stocks, but the application is different. In addition, combined with fundamental analysis, T+0 trading mode is easier to avoid risks in foreign exchange speculation. Also, foreign exchange speculation can now be leveraged, that is, the margin system. The margin 1 000 USD can be used for operations of 65438+ 10,000 USD.

Narrator: Dream of dreams-the first level of probation

Very good!

Commentator: Gobe Leask-a second-class scholar.

Total of other answers 1.

Introduction to foreign exchange speculation

1. How to open an account? -becoming a trilogy of benefiting the people II. How to conduct specific foreign exchange transactions?

3. How to get foreign exchange quotes and information? 4. What do you think of the bank's exchange rate quotation?

5. How can foreign exchange transactions be profitable? 6. Business hours and currencies of individual foreign exchange transactions of banks

7. How to grasp the international capital flow to make your foreign exchange trading profitable?

Speculation skill

Chart in Technical Analysis-Histogram in Technical Analysis

What is the channel in the K-line diagram in technical analysis?

How do support lines and resistance lines come into being? Will the support bit and the resistance bit be converted to each other?

What are trends, bull markets and bear markets?

How is the head and shoulder shape formed? How to calculate the target price through the head and shoulders?

What are the double top type and double bottom type? Operation strategy of flipping the form

How to operate when the price jumps? What if I see symmetrical triangle?

What is the meaning of the figure of rising triangle? What is the meaning of the descending triangle?

What do you mean by percentage retreat? How is the moving average generated?

Is the double moving average more reliable? What is the full name of MACD?

Why does foreign exchange analysis basically ignore the influence of trading volume? How to predict the trend of foreign exchange market

One of retail psychology: crowded places rush to retail psychology; The other is to lose luck and win greed.

The third psychology of retail investors: superstitious rumors rather than the market itself

References:

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