Home > Foreign exchange >

Foreign exchange margin foreign exchange margin trading

: Foreign exchange  

What is the foreign exchange margin? In the foreign exchange margin transaction, the trader will provide a certain amount of credit to invest in the customer. If the customer wants to buy a 100,000 Euro, he can only make a deposit with a deposit of 10,000 Euro. Of course, the customer is willing to invest more money is no problem. The trader only asks the customer to keep the funds in the account at the lower limit of 10,000 when the investment is made. The minimum deposit for maintaining the transaction is called the deposit. Under the margin system, the same funds can obtain relatively more investment opportunities than traditional investments, while the amount of profits and losses is relatively enlarged. However, taking advantage of this leveraged approach allows for more flexible use of various investment trading strategies. This means that it is small and big, and it is a lot of money. The so-called foreign exchange margin trading refers to the establishment of a trust investment account by signing a contract with a (designated investment) bank, depositing a fund (guarantee) as a guarantee, and setting the credit operation quota by the (investment) bank (or brokerage bank) ( That is, 20-200 times the leverage effect), investors can freely buy and sell spot foreign exchange of the same value within the quota, and the profit and loss caused by the operation will be automatically deducted or deposited from the above investment account. Allowing small investors to use smaller funds to obtain larger trading quotas, as well as using global foreign exchange as a way to avoid risks, and create profit opportunities in exchange rate changes. For example, if the margin financing ratio is 100 times, that is, the minimum margin requirement is 1%, investors can conduct transactions of up to 100,000 US dollars with a leverage of 1000 US dollars, making full use of the leverage effect. In addition to capital amplification, another attraction of foreign exchange margin investment is that it can operate in both directions. You can buy profit when the currency rises (do long), or sell profit when the currency falls (short). Therefore, it is not necessary to be limited by the so-called bears that cannot make money, providing more profitable opportunities and opportunities. With the increasing international trade contacts and the integration of global financial markets, the foreign exchange market has actually become the world's largest financial trading market, playing a key role in the transnational flow of funds. Because of its coherent global five continents, 24-hour non-stop trading patterns, fair and transparent field behavior and smooth liquidity, the T+0 clearing system has long been a popular investment and financial management tool in recent years, as well as manufacturers responding to exchange rate changes. The best way to avoid risks. However, if the exchange rate fluctuates little by the full transaction (average daily amplitude is 0.7-1.5%), the investment remuneration is small, so the general foreign exchange transaction amount is large, not the majority of small investors can use. The foreign exchange margin system, with the principle of leverage, has made the foreign exchange market increasingly active and the volume of transactions has increased dramatically. Whether it is capital investment or corporate wealth management, it is not regarded as a brand new concept. Trading Principles of Foreign Exchange Margins Foreign exchange margin trading is where an investor conducts foreign exchange transactions with a trust provided by a bank or broker. It makes full use of the principle of leveraged investment, a kind of forward foreign exchange trading between financial institutions and financial institutions and investors. In the transaction, investors can make 100% of the transaction only by paying a certain margin, so that investors with small funds can participate in the foreign exchange transactions on the financial market. According to the level of developed countries, the general financing ratio is maintained at 10-20 times. In other words, if the financing ratio is 20 times, then investors can trade foreign exchange as long as they need to pay a margin of about 5%. That is, investors only need to pay 5,000 US dollars to conduct 100,000 US dollars of foreign exchange transactions. For example, investor A conducts foreign exchange margin trading with a margin ratio of 1%. If the investor expects the day to rise, then the actual investment of 100,000 US dollars (1000 × 1%) of the margin, you can buy a contract value of 1000. Wanmei’s day. When the exchange rate against the US rose by 1% on that day, investors would be able to make a profit of 100,000 US dollars and the actual rate of return would reach 100%. However, if the day falls by 1%, then the investors will lose their money and their principal will be lost. Generally, when the loss of the investor exceeds a certain amount, the dealer has the right to stop the loss. Characteristics and advantages of foreign exchange margin trading 1. The biggest feature of foreign exchange margin is to adopt the margin method and make full use of the principle of leverage to achieve small and large. 2, foreign exchange margin trading can be operated in both directions, that is, investors can be bullish or bearish, so the operation is very flexible. The currency exchange rate will have a certain ups and downs in one day. Based on the principle of two-way operation, investors can not only buy at low prices, but also sell at high prices. They can also sell at high prices and then buy at low prices. And profit. These two characteristics are very similar to futures trading. 3, 24 hours and T + 0 trading mode, that is to say, foreign exchange margin trading 24 hours a day without interruption (except weekend global rest). And the T+0 model also makes investors' transactions very casual and convenient. Investors can enter the forex market at any time to buy and sell, and investors can enter and exit at will to change their investment strategy. 4. There is no expiration date for foreign exchange margin trading, so investors can hold positions indefinitely. Of course, investors must first ensure that there is sufficient funds on the account. Otherwise, when the amount of funds is insufficient, they will face the risk of forced liquidation. 5. Investors are rich in the types of currencies selected for foreign exchange margin trading, and all convertible currencies can be traded.


Copyright © 2017 ZICMS. DAX Insurance Finance all rights reserved