With the development of information technology and the widespread use of computers, foreign exchange trading has gradually become one of the mainstream investment markets. The fact that foreign exchange trading has become a trend is related to its own advantages. Therefore, many brokers have been developing in this industry, allowing investors from all over the world to easily access foreign exchange market information. Foreign exchange trading has the following advantages:
There are many participants in the foreign exchange market, including governments and central banks, general banks, international companies and even individual investors. The foreign exchange market itself is already at a fairly mature stage, and the hardware and software support is conducive to the participation of various participants. The liquidity in the market is very large. According to statistics, the average daily trading volume of the foreign exchange market has exceeded 6 trillion US dollars. If there is no special market condition, investors can almost quickly find a buyer and seller to undertake at a very competitive market price.
Foreign exchange trading is flexible and can be traded in both directions, with profit opportunities for both long and short positions. Investors buy if they think the price will rise, and sell if they think the price will fall. There is no so-called "bear market" in the foreign exchange market, that is, investors can choose to be bearish and make a profit when they accurately predict the decline of a currency.
The foreign exchange market has huge liquidity, and there are many different participants from all over the world. Currency itself is a global asset, which is difficult to manipulate. There is little insider trading, so there are almost no so-called big players or large institutions that can completely control the foreign exchange market price, and the independence of the foreign exchange market is maintained. It is relatively easy for investors to understand the news or information with high transparency. Macro factors include global inflation, monetary policy, and even geopolitics. By studying the trend of the foreign exchange market, we can mostly understand the lifeline of the global economy and help invest in other markets.
Stock trading is easy to get started with and can be said to be the traditional and most common investment method. However, in fact, the foreign exchange market is more attractive than the stock market in many ways. Here are some of the advantages:
The stock market is limited by the opening hours of local exchanges and cannot be compared with the foreign exchange market, which is traded 24 hours a day, 5 days a week. Due to the time difference between different places, the foreign exchange market, which is mainly over-the-counter (OTC), can operate non-stop, allowing investors to buy and sell at any time, and enter and exit the market flexibly at any time, so as to seize better opportunities.
The exchange rate is the relative price of two currencies. Even if the economic prospects of the two countries are not good, as long as one side has a relative advantage, the exchange rate can still fluctuate, and there is still profit under the unlimited long and short trading operations. In the stock market, because short selling is sometimes not popular and not direct, once there is economic uncertainty, the buying and selling opportunities will decrease in a falling market.
There is generally no commission charge for foreign exchange transactions, and brokers provide free real-time quotes and charts, and transaction costs (also known as spreads) are usually very low. The entry threshold is also low, and investors do not care about the minimum amount in foreign exchange transactions. They can start trading with an initial capital of several hundred US dollars.
All financial products traded on margin carry a high degree of risk to your capital. They are not suited to all investors and you can lose more than your initial deposit. Please ensure that you fully understand the risks involved, and seek independent advice if necessary.