Forex

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Forex transaction: buying one currency in a pair of currency combinations and selling another currency at the same time. Foreign exchange is traded in currency pairs, such as euro / US dollar (EUR / USD) or US dollar / Japanese yen (USD / JPY).
 
The forex trading market, also known as the "Forex" or "FX" market, is the largest financial market in the world, with an average of more than $5 trillion in capital turnover every day - more than three times the total trading volume of all securities markets in the United States.
 
The concept of trading foreign exchange is very simple: a commodity that can be exchanged with other currencies. By buying and selling currencies, foreign exchange traders earn spreads through exchange rate fluctuations. The great charm of the foreign exchange market is that the transaction cost is very low. This means that transactions can be completed in a very short time, as short as a few seconds, or longer cycles.
 
 
Why forex transactions?
 
circulation
 
The forex market is the financial market with the largest circulation in the world, and the transaction cost is lower than that of buying and selling other financial products. Due to the depth of the foreign exchange market, compared with other financial markets, the sliding point will hardly appear. Under normal market conditions and scale, there will be no sliding point in your position in the currency portfolio with the largest circulation.
 
 
24-hour global market
 
Forex trading is not conducted on the central exchange or a fixed place, but outside the trading place (over-the-counter) through electronic trading system or telephone, 24 hours a day from Sunday night to Friday night (Australian time). 24-hour trading means that there is no trading gap, and investors can make timely adjustments to political, economic, technical and fundamental factors without waiting for the opening of the market.
 
 
Enter the foreign exchange market
 
With the rapid development of the Internet, retail customers can enter the foreign exchange trading market and trade in one thousandth of a second through online traders. Leveraged foreign exchange trading has greatly increased the trading volume of retail customers. It is predicted that the daily trading volume of retail foreign exchange customers has increased from 10 billion in 2000 to more than 200 billion in 2012 4.
 
Leveraged Trading
 
Foreign exchange trading is a margin trading (Leveraged trading) product. You only need to pay a small part of the contract value as the initial margin to buy and sell. This means that the return on investment and investment income or loss are higher than traditional cash transactions.
 
 
Low transaction cost
 
Most foreign exchange traders do not charge commissions or handling charges for foreign exchange transactions, but profit from the trading point difference, that is, the price difference between the customer's buying (buying price) and selling (selling price). Due to the large circulation and 24-hour trading, the small point spread of the currency portfolio means that the transaction cost is low. In addition, other transaction costs of foreign exchange transactions are also low compared with other financial markets, such as the amount of initial margin required by the transaction is less; The financing ratio, that is, the cost of borrowing funds for overnight transactions, is also low.
 
 
Can buy or sell
 
It is easy for customers to take a positive or negative attitude towards how one currency will affect another. There is no sell (short) limit for freely floating currencies.
 
 
Market volatility
 
The exchange rate will continue to fluctuate and adjust under the influence of different political, economic, technical and fundamental factors. Its volatility makes foreign exchange transactions attract the interest of investors, because the price will change rapidly under the influence of multiple factors, which will create more trading opportunities.

 

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