Introduction to Foreign Exchange Trading

    foreign exchangeIt emerged with international trade,Foreign exchange transactionsIt is a tool for international settlement of creditor debtor relationships. However, in the past decade, foreign exchange trading has not only grown exponentially in quantity, but also undergone significant changes in substance. Foreign exchange trading is not only a tool for international trade, but has also become the most important financial commodity internationally. The types of foreign exchange transactions are becoming increasingly diverse with the changing nature of foreign exchange transactions.


    Foreign exchange trading can be mainly divided into cash, spot, contract spotfutures、optionForward transactions, etc. Specifically, cash transactions refer to the buying and selling of foreign currency between tourists and those who need it for various purposes, including cash, foreign exchange traveler's checks, etc; Spot trading refers to transactions between large banks and between large banks acting as agents for large clients. After the purchase and sale agreement is completed, the payment and delivery of funds must be completed within two business days at the latest; Contract spot trading is a way for investors and financial companies to sign contracts to buy and sell foreign exchange, which is suitable for public investment; Futures trading is conducted at agreed upon times and at predetermined exchange rates, with a fixed amount for each contract; Option trading is a pre traded option to purchase or sell a certain currency in the future; Forward trading is the process of delivering goods on an agreed date according to the contract. The contract can be large or small, and the delivery period is also flexible.


    From the quantity of foreign exchange transactions, the proportion of foreign exchange transactions generated by international trade in the entire foreign exchange transaction is continuously decreasing. According to statistics, currently this proportion is only1%about. So, it can be said that the mainstream of foreign exchange trading now is investment oriented, aimed at making profits from fluctuations in foreign exchange rates. Therefore, spot trading, contract spot trading, and futures trading account for a large proportion in foreign exchange trading.