Three typical characteristics of the foreign exchange market

in recent years,foreign exchangeThe reason why the market is favored by more and more people and has become a new favorite of international investors is closely related to the characteristics of the foreign exchange market itself. The main characteristics of the foreign exchange market are:


1There is a market but no market
There are basically two systems in the financial industry of Western industrial countries, namely the centralized trading operation and the commercial network without a unified fixed location. Stock trading is done through exchanges. Companies such as the New York Stock Exchange, London Stock Exchange, and Tokyo Stock Exchange are the main trading venues for stocks in the United States, the United Kingdom, and Japan. Financial commodities traded in a centralized manner have unified regulations on pricing, trading hours, and settlement procedures, and have established industry associations and established industry codes. Investors buy and sell the required goods through brokerage firms, which is"There is a market and a market". And foreign exchange trading is done through a lack of unified operating markets
The commercial network operates in a centralized and unified location, unlike stock trading. However,Foreign exchange transactionsThe network is global and has formed unorganized organizations. The market is connected by recognized methods and advanced information systems, and traders do not have any membership in any organization, but they must gain the trust and recognition of their peers in the industry. This foreign exchange trading market without a unified venue is called"There is a market but no market". The global foreign exchange market trades an average of trillions of dollars per day. Such a huge amount of funds were cleared and transferred without centralized venues, central clearing systems, and government supervision.


2Circular homework
Due to the different geographical locations of financial centers around the world, the Asian market, European market, and American market have become a whole day due to time differences24The global foreign exchange market for hourly continuous assignments. morning8Half hour(Based on New York time)The New York market is open,9At half past midnight, the Chicago market opened,10San Francisco opened at half past hour,18Sydney opened at half past hour,19Tokyo opened at half past hour,20Hong Kong and Singapore open at half past hour, early morning2Frankfurt opened at half past hour,3The London market opened at half past hour. such24The foreign exchange market operates continuously for hours, becoming a market that operates day and night. It is only closed on Saturdays, Sundays, and major holidays in various countries. This continuous operation provides investors with an ideal investment venue without time and space barriers, allowing them to find the best time to trade. For example, if an investor buys yen in the morning in the New York market, and the yen rises after the opening of the Hong Kong market in the evening, the investor can sell in the Hong Kong market and participate in buying and selling in any market at any time, regardless of where the investor is. Therefore, the foreign exchange market can be said to be a market without time and space barriers.


3Zero sum games
In the stock market, if a certain stock or the entire stock market rises or falls, then the value of a certain stock or the value of the entire stock market will also rise or fall, for example, the stock price of Nippon Steel in Japan will rise or fall800The Japanese yen has fallen to400The Japanese yen has reduced the value of all shares of Nippon Steel by half. However, in the foreign exchange market, the fluctuation of exchange rates represents a completely different change in value compared to the change in stock value. This is because exchange rates refer to the exchange ratio of two currencies, and exchange rate changes refer to the decrease in value of one currency and the increase in value of another currency. For example, in22Years ago,1USD exchange360Japanese yen, currently,1USD exchange120The temporary yuan, which means that the value of the Japanese yuan will rise while the value of the US dollar will decrease. In terms of overall value, it will change and will not increase or decrease in value. Therefore, some people describe foreign exchange trading as"zero-sum game"More precisely, it is the transfer of wealth. In recent years, more and more funds have been invested in the foreign exchange market, and the fluctuation of exchange rates has been expanding, which has led to a larger and faster scale and speed of wealth transfer. With global foreign exchange1.5Calculated based on trillions of dollars in trading volume, rising or falling1%That's it1500Billions of funds need to be exchanged for new owners. Despite significant fluctuations in foreign exchange rates, no currency will become worthless. Even if a currency continues to decline, it will always represent a certain value unless it is declared abolished.