Why invest in foreign exchange? Characteristics and advantages of foreign exchange market

. The following are the advantages of foreign exchange market as a hot spot of investment:

24-hour market

the foreign exchange market is open 24 hours. Unlike the stock market, it only trades from 9:30 a.m. to 3:00 p.m. Therefore, the foreign exchange market is suitable for active traders. Investors can trade according to their own schedule. At the same time, the 24-hour uninterrupted feature ensures the smallest market crack; in other words, it excludes the possibility that the opening price is dramatically higher or lower than the closing price. That is to say, because of the 24-hour market, it is impossible to crack high or low. In the stock market and futures market, because all transactions are concentrated on the central exchange, the stock market has a fixed opening and closing time. When the stock market is closed, the trading of stock is very sparse or no trading at all, so the trading after closing is basically impossible.

more importantly, the fixed closing time makes the traders unable to close their positions for a period of time, which further exposes them to greater risks: if there is a major news release that is adverse to the traders after the closing, the traders have no opportunity to close their positions and leave the market and reduce losses. Further, traders can only have the opportunity to close their positions when they open the next day, and the opening price may be completely different from the closing price of the previous trading day.

. In addition, a pure electronic market allows traders to trade directly with dealers, which can further reduce transaction costs by eliminating the cost of price and middleman. Because the foreign exchange market provides 24-hour liquidity, traders get a narrow and competitive price gap, making online foreign exchange trading a paradise for short-term traders.

simple transaction varieties

unlike the stock market, which needs to focus on thousands of stock types, the foreign exchange market only needs to focus on several currency pairs, such as pound / dollar, euro / dollar, dollar / yen and other major currency pairs, accounting for 90% of the trading volume of the whole market.

the largest and fairest market

the average daily trading volume in the foreign exchange market is US $1.9 trillion, which is four times that of the futures market and 30 times that of the US stock market, making it the largest and most liquid market in the world. The huge market capacity makes investors have enough profit space although there are many different kinds of currencies in the world, 85% of the daily trading volume is concentrated in the currencies of G-7 countries, commonly known as" major currencies ". Compared with the futures market composed of hundreds of products, multiple exchanges and the stock market composed of more than 50000 shares, it is obvious that the liquidity of the foreign exchange market is incomparable to the stock and futures market. The great benefit of liquidity is that few or no one can manipulate the foreign exchange market. This is the main reason why the foreign exchange market has become the fairest market in the world. In addition, the high liquidity of the market ensures the accurate execution of transactions, and the market trend is very obvious, especially suitable for technical analysis.

both bear and bull markets can make profits

foreign exchange transactions always involve currency pairs. When you buy one currency, you must sell another. You can either hold a long position or a short position. No matter what the market is, you have the opportunity to make profits.

leverage ratio, enlarge capital

leverage ratio is one of the important factors to determine whether a market is worth investing, because traders can use leverage to tailor the degree of exposure to risk. If the investor opens a mini account, the size of the first-hand order is $10000. In the absence of leverage, a trader must pay $10000 to participate in a transaction, whether it is a buy or sell. But if the leverage ratio is 400 times, the trader can buy or sell for just $25 this leverage ratio is much higher than that of the stock and futures market, which enables traders to obtain the maximum profit according to market fluctuations. At the same time, leverage ratio also allows small investors to enter the market that originally belonged to large investors. Of course, we must realize that leverage ratio is a double-edged sword. It can make investors profit quickly, but it can also make you lose money quickly. The transparency of foreign exchange market is very high. A reputable broker will provide traders with real-time updated and executable quotes. Although stocks and futures have also been traded online, the prices displayed on the online exchanges are only the final transaction price, not the executable price. Furthermore, online trading can ensure that all prices of traders are fair. But when trading stocks and futures, the trader must first ask the broker to quote, which gives the broker an opportunity to check the trader's position and manipulate the price on the trader's position most online trading platforms provide real-time portfolio and account tracking functions, which improves the efficiency and transparency of the market. Traders can log on the platform at any time to check the profit and loss of positions, and prepare detailed display positions, orders, margin positions and the latest total profit and loss figures.