What is foreign exchange trading and the characteristics of foreign exchange trading market

What is itforeign exchangetransaction

Foreign exchange transactionsIt refers to the transaction of converting one currency into another at an agreed price.foreign exchangeThe market is the largest trading market in the world, with daily trading volume exceeding 54,000 USD100mn(1)。 In contrast, the average daily trading volume of listed securities on the New York Stock Exchange is only 345.2 USD100mn(2)。

exceed 85% ofForeign exchange transactionsIt is concentrated in major currency combinations, including the euro, the dollar, the yen, the pound, the Swiss franc, the Australian dollar and the Canadian dollar. Market trading activities are the most active in London trading hours, exceeding 38% All transactions are conducted through the London foreign exchange market(3)conduct.

Characteristics of foreign exchange trading market

circulation

The foreign exchange market is the largest financial market in the world, and its transaction cost is lower than that of other financial products. Due to the depth of the foreign exchange market, compared with other financial markets, the sliding point will hardly occur. Under normal market conditions and scale, your position in the currency portfolio with the largest liquidity will not slip.

24 Hour global market

Foreign exchange trading is not conducted at the central exchange or a fixed place, but outside the trading place (OTC) through electronic trading system or telephone, from Sunday evening to Friday evening (UK time) every day 24 Trading is done 24 hours a day.24 Hourly trading means that there is no trading gap, and it can make investors understand the political, economic Technical and fundamental factors should be adjusted in a timely manner, and there is no need to wait for the market to open before trading.

Access to foreign exchange market

The rapid development of the network enables retail customers to 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 2000 Of 100 Billion to 2012 More than 2000 Billion(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 trade. This means that the return on investment and investment income or loss are higher than those of traditional cash transactions.

Low transaction costs

Due to the large circulation and 24 The reason for hourly trading is that the small spread of the currency portfolio means that the transaction cost is low. In addition, the other transaction costs of foreign exchange transactions are also low compared with other financial markets, for example, the amount of initial margin required for transactions is small; The financing ratio, that is, the cost of borrowing funds for overnight trading, is also low.

Can be bought or sold

Customers can take a positive or negative attitude to how one currency affects another, so as to buy and sell freely floating currency pairs.

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 investors' interest, because the price will change rapidly under the influence of multiple factors, which will create more trading opportunities.

Data source reference:

1,3 The Bank for International Settlements2014year7The estimated daily foreign exchange trading volume of the world is published in September.
2 Daily trading volume of listed securities on the New York Stock Exchangewww.nyse.com (2013 year 1 Month to 6 Daily average for the six months of the month)。
4 2012 year 12 month LeapRate’s report: Online transaction: Not only retail customer business and foreign exchange transactions...... Online financial transactions are growingwww.nasdaq.com。