Basic trading method Spot foreign exchange trading is the most commonly used trading method in the foreign exchange market, accounting for most of the total foreign exchange transactions. Mainly because spot foreign exchange transactions can not only meet the buyer's temporary payment needs, but also help buyers and sellers adjust the currency ratio of foreign exchange positions and avoid exchange rate risks. Enterprises can eliminate the losses caused by exchange rate fluctuations within two days by conducting spot foreign exchange transactions with the same amount and opposite direction with existing open positions (assets or liabilities exposed to foreign exchange risks due to differences in foreign exchange assets and liabilities). Since spot foreign exchange transactions only fix the exchange rate for delivery on the third day in advance, their hedging effect is very limited. It is a foreign exchange transaction in which two different currencies are exchanged at the exchange rate agreed by both parties and settled after one or two business days. The mode of spot foreign exchange trading is edited in this paragraph] 1. Forward remittance (favourableexchange) Introduction to foreign exchange transactions Forward remittance (favourableexchange) is a way of remittance, which means that the remitter entrusts the bank to pay the money to the payee through its foreign branches or correspondent banks with some credit instrument (such as draft). The process is that banks collect local currency at home and pay foreign exchange abroad. Because its remittance direction is consistent with the flow of funds, it is called shun remittance. Under the forward remittance mode, customers use their own currency to buy bills from foreign exchange banks, which is equivalent to the bank selling foreign exchange. The parties involved in remittance are ① the remitter, usually the debtor or payer; (2) the payee refers to the creditor or beneficiary; (3) Remittance bank refers to the bank entrusted by the remitter to remit money to the payee; (4) payingbank is a bank entrusted by the remittance bank to receive the remittance from the remittance bank and remit the money to the payee, also known as remittance bank. The relationship between remittance bank and payment bank is principal-agent relationship. After the bank collects local currency and sells foreign exchange, it will notify the creditors or branches of the country where the payee is located or their correspondent banks by means of telegraphic transfer, letter transfer and draft according to the customer's requirements, and pay a certain amount of foreign exchange in his foreign currency deposit account to the payee at the exchange rate of the day. In this way, foreign exchange banks have increased the local currency paid by customers in their own accounts, while the deposits in foreign currency accounts have decreased the corresponding foreign currency. Three specific remittance forms: according to the different delivery methods, spot foreign exchange transactions can be divided into three types. TelegraphicTransfer (T/T/T) is short for telegraphic transfer. T/T by bank is a remittance method in which the remitter directly notifies the overseas remittance bank by telegram or telex and entrusts it to pay a certain amount to the payee. The telegraphic transfer delivery method is to notify the foreign exchange buyer and seller's bank (or the entrusted bank) to collect the transaction amount by telegram or telex. A telegraphic transfer voucher is a telegram or telex remittance power of attorney from the remittance bank or trading center. The delivery method of draft is called DemandDRAFT for short (D/D/D). Bank selling foreign exchange standard refers to a remittance method in which the remittance bank opens a draft issued by a foreign remittance bank at the application of the remitter, and the remitter sends it to the payee or personally carries it to the payee, and then draws money from the remittance bank with the draft. Bill delivery refers to remittance and collection by opening bills of exchange, promissory notes and checks. These bills are evidence of the draft. Mail delivery mode, referred to as mail delivery. Bank sale of foreign exchange is a remittance method in which the remitter directly informs the foreign remitter to entrust him to pay a certain amount to the payee by letter at the application of the remitter. Remittance means to inform the foreign exchange buyers and sellers of the deposit bank or entrust the bank to collect and pay the transaction amount by letter. The remittance voucher is the remittance payment power of attorney of Jiangkuan Bank or trading center. Income analysis The cost and income of the above three remittance methods are different. In the process of remittance receipt and payment, there is a time difference between local currency and foreign currency, which determines that the exchange rate of different remittance methods is different, and the exchange rate depends on the length of the time difference. If the remittance takes a long time on the way, the bank will spend more time using this fund, and the income will be greater, but the cost will be smaller, so the bank's quotation will be lower. On the other hand, if the time is short, the bank will spend less time using this fund, and the income will be small, but the cost will be large, which is also the reason why the bank quotes higher. Generally speaking, telegraphic transfer takes the shortest time in transit (1~2 days), so banks can't use this fund, so the exchange rate of telegraphic transfer is higher. Mail remittance and bill remittance mainly depend on mail, which takes a long time to deliver. Banks have the opportunity to profit from this remittance, and its exchange rate is lower than that of wire transfer. In fact, the difference between the two is equivalent to the interest income during the mailing period. At present, the exchange rate is generally calculated on the basis of telegraphic transfer rate, which has become the basic exchange rate for spot transactions. With the wide application of computers and the increasing computerization of international communication, the postal cycle has been greatly shortened, so the differences between several remittance forms are gradually narrowing. The definition of reverse exchange foreign exchange transaction is collection, which means that the payee (creditor) issues a bill of exchange and entrusts its foreign branch or correspondent bank to collect the money listed in the bill from the payer. Because the capital flow in this way is opposite to the transfer direction of credit instruments, it is called "reverse exchange". For foreign exchange banks, under the reverse exchange mode, customers sell bills to banks, which is equivalent to banks paying local currency and buying foreign exchange. After accepting the collection entrustment of the payee, the foreign exchange bank shall notify its foreign branches or correspondent banks to collect a certain amount of foreign currency from the payer at the exchange rate of the day and deposit it in its foreign exchange account opened in a foreign bank. Therefore, the balance of the domestic local currency deposit account of the bank decreased, while its foreign currency deposit account increased the corresponding foreign currency amount.