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Basic knowleage of forex

Introduction to Forex Trading

Foreign exchange transactions can be mainly divided into cash, spot, contract spot, futures, options, forward transactions and so on. Specifically, the cash transaction is a trade between tourists and foreign exchange cashiers for various other purposes, including cash, foreign exchange travel checks, etc.; spot transactions are between large banks and large banks. After the transaction, the sale and purchase agreement is completed, the fund payment and delivery will be completed within two business days at the latest; the contract spot transaction is a way for the investor to sign a contract with the financial company to buy and sell foreign exchange, which is suitable for the public investment; The agreed time and the transaction at the determined exchange rate, the amount of each contract is fixed; the option transaction is a pre-trade in the future whether to buy or sell a certain currency option; the forward transaction is based on the contract The date is for delivery, the contract can be large or small, and the delivery period is also flexible.

Spot foreign exchange trading (real trading)

Spot transactions are transactions between large banks and large banks that represent large customers. After the sale and purchase agreement is completed, the fund payment and delivery will be completed within two business days at the latest.

Personal foreign exchange trading, also known as foreign exchange trading, refers to a transaction in which a personal entrusted bank refers to the foreign exchange rate of the foreign exchange market and trades one foreign currency into another.

Since Shanghai Industrial and Commercial Bank of China began to represent personal foreign exchange trading business in December 1993, with the substantial increase in the personal foreign exchange deposits of China's residents, as of now, many banks such as industry, agriculture, China, construction, exchange, recruitment, and China Everbright have launched. Personal foreign exchange trading business.

Contract spot forex trading (click trading)

Contract spot foreign exchange trading, also known as foreign exchange margin trading, deposit trading, virtual trading, refers to investors and financial companies (banks, dealers or brokers) specializing in foreign exchange trading, signing contracts for the purchase and sale of foreign exchange, payment A certain ratio (generally no more than 10%) of the trading margin can be used to buy and sell 100,000, hundreds of thousands or even millions of dollars of foreign exchange at a certain financing multiple. The amount of foreign exchange contracts is determined by the type of foreign currency. Specifically, the amount of each contract is 12,500,000 yen, 62,500 pounds, 125,000 euros, 125,000 Swiss francs, and the value of each contract is about 100,000 US dollars.

Assumption: Buying a Japanese Yen for 135.00 yen, buying a real money, buying a voucher of 12,500,000 yen requires US$92,592.59 US$1,000.00 If the yen exchange rate rises by 100 points US$680.00 US$680.00 profit rate 680/92,592.59=7.34%0 680/1000=68% if the yen exchange rate drops 100 points loss US$680.00 US$680.00 loss rate 680/92,592.59=7.34%0 680/1000=68%

There are two kinds of calculation formulas for interest. One is foreign currency for direct price tag, such as Japanese yen, Swiss franc, etc., and the other is foreign currency for indirect price tag, such as Euro, British Pound, Australian Dollar, etc.

The interest calculation formula for the Japanese Yen and Swiss Franc is: contract amount*1/entry price*interest rate*days/360* contract number euro, sterling interest calculation formula is: contract amount* market price*interest rate*days/360*contracts The calculation formula of the profit and loss of the Japanese Yen and Swiss Franc is: contract amount*(1/selling price-1/buy price)*number of contracts-handling fee +/- interest and the profit and loss formula of euro and pound is calculated as: contract amount* (selling price - buying price) * number of contracts - handling fee +/- interest

Foreign exchange margin trading, as an investment tool, is legal in countries and regions such as Europe, America, Japan, Hong Kong, Taiwan, etc. Traders and trading behaviors are regulated by the government.

Futures foreign exchange trading

Futures foreign exchange trading refers to buying and selling a certain amount of another currency in US dollars at an agreed exchange rate according to the agreed exchange rate. There are also differences in the common ground between futures foreign exchange trading and contract spot trading. The trading of contract spot foreign exchange is carried out through banks or foreign exchange trading companies, and the trading of futures foreign exchange is conducted in a special futures market. At present, the futures markets around the world mainly include: Chicago Futures Market, New York Mercantile Exchange, Sydney Futures Market, Singapore Futures Market, London Futures Market. The futures market must include at least two parts: one is the trading market and the other is the clearing center.

The number of futures foreign exchange transactions is exactly the same as the contract spot foreign exchange transaction. Futures foreign exchange trading is at least one contract. The amount of each contract has different rules for different currencies. For example, a pound contract is also £62,500, the yen is 12,500,00 yen, and the euro is 125,000 euros.

There are strict rules for the delivery date of futures foreign exchange contracts. There is no such thing as contract spot foreign exchange transactions. The delivery date of the futures contract is specified as March of the year, March, September, and Wednesday of the third week of December. In the same way, there are only four contract delivery days in a year, but other times can be bought and sold, and cannot be delivered. If the bank is closed on the delivery date, it will be postponed for one day.

The price of a futures foreign exchange contract is all expressed in terms of how much a foreign currency is equal to the US dollar. Therefore, except for the British pound, the futures foreign exchange price and the contract foreign exchange rate are exactly mutually reciprocal. For example, the December Swiss franc futures price is 0.6200, and the reciprocal is exactly 1.6126.

There is no interest expense and income problem in the trading of futures foreign exchange. Whether buying or selling any kind of foreign currency, investors can't get interest, and of course they don't have to pay interest.

The method of buying and selling futures foreign exchange is exactly the same as the contract spot foreign exchange. It can be bought first and then sold, or sold first and then bought.

Risk warning:All foreign exchange, precious metals are accompanied with great risk, therefore is not suitable for all investors. Please be sure to fully understand the risks at your own can bear within the scope of the investment. More risk for details, please refer to the risk of WSG statement and deposit policy.