How To Define Foreign Exchange Margin Trading?

　　 Foreign exchange margin trading It is a form of foreign exchange trading that expands the actual transaction amount by tens of times and hundreds of times by leverage. He can be "small and extensive" trading characteristics, making it the mainstream international currency trading means. However, because of its double effect on transaction risk, foreign exchange margin trading is still a restricted area in China for ten years. However, as China's opening up process continues to accelerate, many investors have been indirectly exposed to the prevailing foreign exchange trading mode. With the gradual relaxation of China's foreign exchange control policy in recent years, the industry expects that foreign exchange margin trading will soon be liberalized in China.

　 What is foreign exchange margin trading?

Speaking of foreign exchange margin trading, first of all, what is foreign exchange trading?

Foreign exchange transaction is the process of exchange between one country's currency and another country's currency. Embodied in Specific operation That is, there are normative or semi standardized processes between individuals and banks, banks and banks, individuals and trading brokers, banks and brokers, brokers and brokers.

Foreign exchange transactions are the largest trading volume and the most frequent capital flows in the world. The turnover is more than 14000 billion dollars per day. Because the US dollar is a common currency in form, it is generally priced in dollars. With the rise of the euro, it is not uncommon to use the euro as settlement unit in the foreign exchange market. Unlike other financial markets, there are no specific locations or concentrated exchanges in the foreign exchange market. All transactions are conducted through banks, trading brokers, and personal electronic networks, phones, traditional counters, etc. It is just that some institutions, such as banks, provide channels for individuals to provide foreign exchange transactions, while others mainly develop business through providing foreign exchange channels to other institutions. Just because there are no specific exchanges, the participants in the transaction are all over the world, so the foreign exchange market can operate for 24 hours. In the process of bargaining, the quotations generated by bargaining will be transmitted through the major information companies, including the software system, the website platform and various trading platforms, so that investors can get the quotations of foreign exchange transactions in real time.

So what kind of foreign exchange trading is the margin trading?

Foreign exchange margin trading, also known as deposit trading, refers to a spot or forward foreign exchange transaction between financial institutions and between financial institutions and individual investors. In essence, it is somewhat similar to the futures trade that has been developing for many years in China. In margin trading, traders only pay 0.5%-20% deposit (margin), which can carry out a 100% amount of transactions, that is, "small and broad." While the possibility of profitability increases, the risk is similarly magnified. It is really a way of investment that requires wits and wits.

Foreign exchange margin trading originated in London in 80s and was later introduced into Hongkong. In China, a group of individuals and institutions participated in such transactions in the early 90s of last century. Also left behind all kinds of stories of profits and losses. Let's sort out the details and listen to them in the future.

As we have mentioned before, foreign exchange margin trading is very similar to futures trading. At the same time, in addition to implementing a margin system like futures trading, foreign exchange margin trading is also different from futures trading. Characteristic :

First, the market for foreign exchange margin trading is invisible and unfixed. All transactions are conducted between investors and financial institutions and financial institutions. There is no specialized institution like stock exchanges.

Two, foreign exchange margin trading does not involve the concept of delivery date and delivery month, unlike futures, and it has no maturity date. Traders can hold their positions indefinitely according to their wishes, but they need to calculate overnight interest rates.

Three, foreign exchange margin trading has a large scale and many participants.

Four, foreign exchange margin trading is very rich in currency. Any internationally convertible currency may be used as a trading variety.

Five, the trading time of foreign exchange margin transactions is 24 hours.

Six, it is very interesting: foreign exchange margin transactions to calculate the interest rate difference between various currencies, financial institutions to pay customers or deducted from the customer's margin.