Foreign Exchange Trading Platform - Forex Trading - ACFX

by acfx0001 on 2011-08-17 12:10:03

Foreign exchange trading, also known as margin trading, is a financial investment tool superior to stock market investment. Its investment direction is the global foreign exchange market. Since the daily fluctuation of exchange rates is not as large as that of the stock market, if you invest in real account foreign exchange trading, the return on investment will be small with just $5 given for opening an account. By using margin trading, foreign exchange investors can use the principle of leverage, which means making big profits with small investments, allowing two-way trading and flexible operations. Moreover, since it's a global market, the chance of the market being controlled by individuals or institutions is very small, so compared to the stock market, it is more transparent and fair.

It usually refers to various means of payment denominated in foreign currencies that can be used for international settlement. It includes: foreign currency, foreign currency deposits, foreign currency securities (government bonds, treasury bills, corporate bonds, stocks, etc.), and foreign currency payment vouchers (bills, bank deposit certificates, postal savings certificates, etc.).

Foreign exchange is short for international exchange. The concept of foreign exchange has both static and dynamic distinctions. Dynamic foreign exchange refers to the financial activity of converting one country's currency into another to settle international debts. In this sense, dynamic foreign exchange is equivalent to international settlement. Static foreign exchange is further divided into broad and narrow senses. Broadly speaking, foreign exchange refers to all foreign financial assets as mentioned in foreign exchange management laws. According to the current "Regulations on Foreign Exchange Administration of the People's Republic of China," Article 3 defines foreign exchange as any means of payment and assets denominated in foreign currencies that can be used for international settlement. Narrowly speaking, foreign exchange refers to the means of payment denominated in foreign currencies used for international settlement.

Foreign Exchange Market: This refers to the market where foreign currencies and securities denominated in foreign currencies are bought and sold. It is a major component of the financial markets.

Foreign Exchange Market

Characteristics of the Foreign Exchange Market

If we look at the geographical scope and speed of foreign exchange transactions, the foreign exchange market has two basic characteristics: spatial unity and temporal continuity.

Spatial unity refers to the fact that due to modern communication technology (telephones, telegrams, telex, etc.) used in foreign exchange transactions across countries, their connections are very tight, integrating the entire world into a unified global foreign exchange market.

Temporal continuity refers to the fact that business hours of various foreign exchange markets around the world overlap, forming a continuous cycle of operations.

Foreign Exchange Trading

Among various types of investment, foreign exchange trading can be considered one of the fairest and most attractive investment methods.

Foreign exchange trading is when investors use financing provided by banks, market makers, or brokers to conduct foreign exchange transactions.

The general leverage ratio is over 20 times, meaning the investor's funds can be magnified 20 times for trading. The higher the leverage, the less capital the client needs to invest, fully utilizing the leverage effect to make significant gains with minimal investment.

Besides capital amplification, another attractive feature of foreign exchange trading is the ability to trade in both directions. You can buy when the currency rises (go long) or sell when the currency falls (go short), thus avoiding the limitation of being unable to operate during bear markets.

Foreign Exchange Margin Trading, also known as virtual account trading or margin trading, is when investors use their own funds as collateral to amplify their trading power through financing provided by banks or brokers, thereby increasing their trading capital.

Exchange Rate

Also known as the exchange rate, it represents the price of one country's currency expressed in terms of another country's currency, or the exchange ratio between the two currencies, involving foreign exchange account fees.

1. In the foreign exchange market, currency names are represented by three-letter codes.

For example:

EUR/USD (Euro against US Dollar) USD/JPY (US Dollar against Japanese Yen)

GBP/USD (British Pound against US Dollar) USD/CHF (US Dollar against Swiss Franc)

USD/AUD (US Dollar against Australian Dollar) NZD/USD (New Zealand Dollar against US Dollar)

USD/CAD (US Dollar against Canadian Dollar) EUR/JPY (Euro against Japanese Yen)

EUR/GBP (Euro against British Pound) EUR/CHF (Euro against Swiss Franc)

GBP/JPY (British Pound against Japanese Yen) GBP/CHF (British Pound against Swiss Franc)

AUD/JPY (Australian Dollar against Japanese Yen)

2. Exchange rates are displayed with five significant digits, and the smallest unit of change is called a pip, which is the last digit of the rate.

For example: 1 Euro = 1.2800 USD; 1 USD = 108.00 JPY

Counting from right to left, the first digit is referred to as X pips, which is the smallest unit of change in the exchange rate; the second digit is referred to as X ten pips, and so on.

If the Euro/USD changes from 1.2800 to 1.2830, it is said that the Euro/USD has risen by 30 pips.

If the USD/JPY changes from 108.00 to 107.20, it is said that the USD/JPY has fallen by 80 pips.

Assuming: Buying Yen at 1 USD = 135.00 Yen, 100,000 USD can buy 13,500,000 Yen.

Real buying and selling vs Margin form

Buying 12,500,000 Yen requires US$92,592.59 in a real transaction but only US$1,000.00 in a margin transaction (1250000∕135=92592.59).

If the Yen exchange rate rises by 100 pips,

Assumed profit: US$680.00 in both cases

Profit rate: 680/92,592.59=7.34% for real transaction, 680/1000=68% for margin transaction

If the Yen exchange rate falls by 100 pips,

Loss: US$680.00 in both cases

Loss rate: 680/9...

Advantages of Foreign Exchange Trading Platforms

1. Investing in national economies

2. Two-way trading

3. Margin trading, light investment cost

4. Large trading volume

5. T+0 trading

6. Ability to control loss extent (stop-loss setting)

7. 24-hour trading

8. High interest returns

Many internet users have heard about it. To understand foreign exchange trading, one must first learn more about the foreign exchange market. All foreign exchange operations together form the foreign exchange market. So what exactly is the foreign exchange market?