What is foreign exchange trading?
Foreign exchange transaction, also known as "Forex" or "FX", is a foreign exchange transaction in which one foreign currency is converted into another, that is, buying one currency in one currency portfolio and selling another currency at the same time. In the international market, the exchange rates of various currencies fluctuate frequently and are traded in the form of currency pairs, such as euro against US dollar (EUR / USD) or US dollar against Japanese yen (USD / JPY). Unlike stocks or futures, there is no trading center for foreign exchange transactions. All foreign exchange transactions are carried out through telephone or electronic network.
What is the foreign exchange market?
The foreign exchange market is currently the largest financial market in the world, with an average daily trading volume of US $4 trillion. From 5 p.m. EST on Sunday to 5 p.m. EST on Friday, the foreign exchange market operates 24 hours. Trading starts from Sydney every day. With the rotation of the earth, the business days of each financial center in the world will start in turn, from Tokyo to London and then to New York. Different from other financial markets, in the normal opening period of the foreign exchange market, whether day or night, foreign exchange traders can respond to market fluctuations at any time.
What are the advantages of foreign exchange trading?
Flexible lever: The leverage ratio provided in foreign exchange trading is usually 100 times that of stock trading. In TNG Company marks, you can enjoy the trading leverage of up to 100:1. For example, in the stock market, investors can buy 2000 yuan of shares with 1000 yuan through margin trading. Through TNG Company marks limited, foreign exchange traders can obtain the purchasing power of US $300000 with us $1000. Therefore, the effectiveness of foreign exchange trading is much better than that of stocks. Investors should pay attention to that leveraged trading may amplify losses while amplifying gains. You can only trade when you are able to bear these risks.
Two way transaction: In the stock market, if investors want to sell short and take advantage of the bear market, they will face many restrictions. For example, higher capital requirements, improved quotation rules and complex operation processes. The short selling mechanism of foreign exchange is very flexible and unrestricted. Foreign exchange traders can freely invest and profit by taking advantage of the rise and fall of the market. Take the euro against the US dollar (EUR / USD) as an example. When the EUR / USD appreciates, you can choose to buy; When EUR / USD depreciates, you can choose to sell.
24-hour transaction: The foreign exchange market is a 24-hour global market. Traders can arrange trading time according to their living habits. This is one of the reasons why many office workers choose foreign exchange investment. At the same time, more and more people begin to use the stock market closing time to trade foreign exchange as an effective channel to spread investment risks.
High liquidity: The foreign exchange market has high liquidity, implements the T + 0 system, and is easy to cash. No matter when and where any news occurs, investors can make an immediate trading response and make flexible planning for the time of entry or exit. Compared with the foreign exchange market, the scale and trading volume of other financial markets are much inferior, such as poor liquidity. For example, in the futures market, it is often difficult to clinch a deal, and the price is easy to jump and difficult to master. The foreign exchange market is always mobile and can be traded at any time. The real-time quotation system of foreign exchange can ensure that all market orders, limit orders or stop loss orders can be completely traded.
Low cost no commission: The cost of foreign exchange transactions is usually limited to the bid ask spread of currency pairs. TNG Company GLOBAL does not charge any commission, and its profit is only obtained from the quotation point difference. The spread cost of transactions in TNG Company marks can be as low as 1.8 points. Click here to view our point spread quotation.
What are the risks of foreign exchange trading?
Any OTC foreign exchange transaction has certain risks, including (but not limited to) leverage, credit reliability, limited legal protection, and market turbulence factors that may greatly affect the price or trading volume of currency pair. The amplification effect of leverage ratio is two-way. On the one hand, it increases the trading quota of investors and doubles the investment income; On the other hand, it also increases the risk, so that investors may face greater losses. Therefore, before deciding to participate in foreign exchange transactions, please carefully consider your investment objectives, experience level and risk tolerance. If you can't bear the loss, please don't invest rashly.
How to reduce the risk of foreign exchange transactions?
TNG Company marks provides investors with a variety of effective trading tools:
First of all, it is very important to understand the market. TNG Company marks provides you with various free learning materials and one-to-one customer service on the website to help you learn foreign exchange trading. Good learning is a necessary condition for successful trading. At the same time, you can also deposit a small amount of money to start with small transactions and have an in-depth understanding of the specific operation of the foreign exchange market.
Secondly, you can control the risk by setting stop loss / stop win orders to help you reduce unforeseen losses in the future. At the same time, stop loss / stop win orders can also help you effectively supervise transactions. After these management are set in your account, you don't have to keep your computer all the time.
Finally, before entering the market, you must decide the investment amount of each transaction according to your affordability. In order to spread the risk, please don't invest all your money in the same transaction. Generally, the investment capital of a transaction should be controlled within 10% - 20% of the total capital. In this way, even if you misjudge the direction of the market, you can still ensure sufficient funds for the next transaction and strive for profit opportunities in the case of timely stop loss. At the same time, small investment can keep you calm and don't panic because you face large losses.