Foreign exchange
Foreign exchange transactions
Foreign exchange transactions
Foreign exchange trading is a way of exchanging one foreign currency for another, that is, buying one currency in a currency pair and selling another currency at the same time. The exchange rates between various currencies in the international market fluctuate frequently and are traded in the form of currency pairs, such as the euro against the US dollar (EUR/USD) or the US dollar against the Japanese yen (USD/JPY). Unlike stocks or futures, there is no trading center for foreign exchange trading. All foreign exchange transactions are conducted through data networks.
Foreign Exchange Market
The foreign exchange market is currently the largest financial market in the world, with an average daily trading volume of 6 trillion US dollars. The foreign exchange market operates 24 hours a day from 5 pm Eastern Time on Sunday to 5 pm Eastern Time on Friday. Trading begins every day in Wellington, New Zealand, and as the earth rotates, the business hours of each financial center in the world will start in sequence, from Tokyo to London, and then to New York. Unlike other financial markets, during normal forex trading hours, forex traders can react to market fluctuations at any time, day or night.
Advantages of forex trading
1. Flexible leverage: The leverage ratio provided in forex trading is usually 100 times that of stock trading. At CURRENCIES DIRECT LIMITED, you can enjoy a trading leverage of up to 400:1. For example, in the stock market, investors can use 1,000 yuan to buy 2,000 yuan of stocks through margin trading. Through CURRENCIES DIRECT LIMITED, forex traders can use 1,000 US dollars to get 400,000 US dollars of purchasing power. Therefore, forex trading is far more effective than stocks in making a small investment for a big investment. Investors need to be aware that leveraged trading may also amplify risks while amplifying profits. You can only trade when you are able to bear these risks.
2. Two-way trading: In the stock market, if investors want to short sell and take advantage of the bear market to make profits, they will face many restrictions. For example, higher capital requirements, higher quotation rules and complex operating procedures. However, the short selling mechanism of foreign exchange is very flexible and has no restrictions. Foreign exchange traders can freely use the market's ups and downs to invest and make profits. Take the euro against the US dollar (EUR/USD) as an example. When EUR/USD appreciates, you can choose to buy; when 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 time according to their living 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's off-hours to trade foreign exchange, taking it 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 instant trading responses, and there can be flexible rules for the time of entry or exit. Compared with the foreign exchange market, the scale and trading volume of other financial markets are much inferior, such as poor liquidity. For example, in the futures market, it is often difficult to trade, and the price is prone to gaps and is difficult to grasp. The foreign exchange market is always liquid, and transactions can be made at any time. The real-time quotation system of foreign exchange can ensure that all market orders, limit orders or stop orders are fully executed.
5. Low cost: The cost of foreign exchange transactions is usually limited to the bid-ask spread of the currency pair. CURRENCIES DIRECT LIMITED's profits are only obtained from the quote spread. The spread cost of trading in CURRENCIES DIRECT LIMITED can be as low as 1.6 points.