Characteristics of foreign exchange transactions
1. Low transaction costs
Under normal market conditions, the small transaction cost, that is, the point difference between bid and offer prices, is generally less than 0.1%. But in the larger dealers, you can get as low as 0.07% spread, and now you can generally get 3-5 trading point spreads. Of course, the cost also depends on your leverage level.
2. No middleman
There is no middleman involved in spot foreign exchange trading. Investors can buy and sell currency pairs directly in the market.
3. No fixed transaction scale
In futures trading, the exchange has formulated a fixed trading scale (number of hands). For example, the contract unit of precious metal silver is 5000 ounces. In spot foreign exchange trading, investors decide their own investment share or trading scale, and the minimum trading amount is $25.
Foreign exchange trading does not have to wait for the market to open.
The "trading time" of a global day is from 7:00 a.m. Australian time on Monday to 5:00 p.m. New York time on Friday, that is, from 3:00 a.m. on Monday to 5:00 a.m. on Saturday in Beijing time.
For investors who want to trade part-time, this is an ideal way to trade. Because you can choose the trading time: morning, noon, evening, breakfast time or rest time.
5. No banker
It is very large and has a large number of participants. No entity can control the market price for a long time, even the central bank or the giant chaebol does not have the ability.
6. High leverage ratio
High leverage is easy to establish positions flexibly, but high leverage is a double-edged sword. For high-level investors, under the premise of strictly controlling risks, profits or floating profits can continue to use high leverage to increase positions, which provides the possibility of realizing huge profits.
For example, provide a 50:1 leverage, which means that a $50 margin allows traders to buy and sell $2500 worth of currency.
Similarly, a $500 margin can trade $25000 in currency, and so on. Although the profits are considerable, traders should always remember that without proper risk management ability, highly leveraged trading will lead to huge losses.
7. High liquidity
In the spot market, the daily trading volume can reach 200 billion US dollars. This makes it the largest and most liquid market in the world.
The scale of trading in this market dwarfs other markets. The total daily trading volume is more than three times that of securities and futures markets.
"High liquidity" means that under normal market conditions, with the click of a mouse, you can immediately buy or sell as you wish. You can even set your online trading platform to automatically know the profit position at the position of your price limit order, or automatically balance the loss position that reaches your stop loss order position when the price moves in reverse.
8. Low entry threshold
Participating in foreign exchange margin trading can open an account through fax and network, and the procedures are simple.
The minimum amount of funds for each margin account varies, mostly between a few hundred US dollars (mini account) and several thousand US dollars (standard account). It can be said that the success of foreign exchange trading does not depend on the amount of funds, but depends on the level of operation. Small funds can also grow rapidly, which provides another battlefield for the working class to realize their dream of wealth.
9. Free simulation account
Most online traders offer "simulated accounts" for investors to practice and improve their trading skills. They also provide real-time news and investment advice on foreign exchange.
For some investors who are in financial crisis, the existence of "simulated account" appears to be more valuable. They can experience foreign exchange trading through the method of simulated trading. After some practice, they can really create real accounts and conduct real-time trading.