At present, due to the lack of clear regulatory measures for the leverage of spot foreign exchange transactions in China, domestic foreign exchange dealers are mostly platforms for overseas institutions to supervise. The main differences between foreign exchange firm offer and spot offer are as follows:
First, leverage. Firm foreign exchange trading usually adopts the leverage ratio of 1 to 1, which means that investors can only control how much they trade at the cost price, so making firm foreign exchange trading usually requires investors to have enough principal at the beginning.
The leverage of spot foreign exchange trading can be up to 400 times, which means that investors can control $40,000 to trade with 100, and the profit opportunities are greatly increased.
Second, exchange rate fluctuations. The quotation of foreign exchange firm trading is mainly based on the quotation of RMB middle price provided by the bank. Under normal circumstances, the exchange rate fluctuation is relatively low, which can only fluctuate by dozens of points at most in a day, so it has the characteristics of small profit and small risk.
The spot foreign exchange rate fluctuates according to the changes in the international foreign exchange market. It is common for the exchange rate to fluctuate by hundreds of points a day, which has the characteristics of high risk and high income.
Third, the handling fee. The handling fee for foreign exchange transactions is relatively high. In addition to the handling fee, there will be some other fees.
Investors in spot foreign exchange transactions only need a little difference in procedures, which is much lower than the firm offer of foreign exchange.
Of course, there are many differences between foreign exchange and spot, such as more convenient foreign exchange deposit and withdrawal, two-way profit model of spot foreign exchange, and spot foreign exchange can be traded 24 hours a day.