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Characteristics of the foreign exchange market

Characteristics of the foreign exchange market

Characteristics of the foreign exchange market

In recent years, foreign exchange market are more and more popular.It has become the new lovers for international investors, which is closely related to the characteristics of the foreign exchange market. The main features of the foreign exchange market are:

  • No Market

The financial industry in the western industrial countries basically has two systems, namely, the central operation of centralized trading and the business network without unified fixed places. Stock trading is bought and sold through exchanges. Like the New York Stock Exchange, the London Stock Exchange, and the Tokyo Stock Exchange, which are the main trading places of stocks in the United States, the United Kingdom, and Japan, the financial products that are bought and sold collectively have uniform provisions for quotation, trading time, and settlement procedures. A trade association was established and a code of practice was established. Investors buy and sell the goods they need through a brokerage firm. This is “there is a market.” Foreign exchange trading is conducted through a network of merchants that do not have a unified operating market. It is not like a centralized location of stock trading. However, the network of foreign exchange transactions is global and forms an organization without organization. The market is connected with advanced information systems by means of mutual recognition. Traders do not have membership in any organization, but must obtain the same Industry trust and recognition. This kind of foreign exchange market without a unified venue is called “there is no market.” The global foreign exchange market trades an average of $1 trillion a day. Such huge amounts of money are in the absence of centralized facilities and without the control of a central clearing system, and the completion of liquidation and transfer without the supervision of the government.

  • Recycling operations

Due to the geographical location of various financial centers around the world, the Asian market, the European market, and the American market have become a global foreign exchange market that operates continuously 24 hours a day due to the time difference. 8:30 am (New York time) New York market opened, 9:30 Chicago market opened, 10:30 San Francisco opened, 18:30 Sydney opened, 19:30 Tokyo opened, 20:30 Hong Kong, The market opened in Singapore, opened at 2:30 in the morning, and opened at 3:30 in London. With such 24 hours of uninterrupted operation, the foreign exchange market has become a market that stays up all night, and the foreign exchange market will only be closed on Saturdays, Sundays and major festivals in various countries. This continuous operation provides investors with an ideal investment location without time and space barriers, and investors can find the best time to trade. For example, if investors buy yen in the New York market in the morning, the yen rises after the market opens in the evening, investors can sell in the Hong Kong market, regardless of where the investor is, he can participate in any market, any time. Buying and selling. Therefore, the foreign exchange market can be said to be a market without time and space barriers.

  • Zero-sum game

In the stock market, if a certain stock or the whole stock market rises or falls, then the value of a stock or the stock value of the entire stock market will rise or fall, for example, the price of Japan’s Nippon Steel’s stock will 800 yen fell to 400 yen, so the value of all Nippon Steel’s stocks has also been reduced by half. However, in the foreign exchange market, the change in the amount of value represented by the fluctuation of the exchange rate is completely different from the change in the value of the stock. This is because the exchange rate refers to the exchange ratio of the two currencies, and the change in the exchange rate is also a decrease in the value of the currency. Another increase in the value of money. For example, 22 years ago, 1 US dollar was exchanged for 360 yen. At present, 1 dollar is exchanged for 120 temporary yuan. This shows that the value of the Japanese yen has risen, and the value of the US dollar has declined. From the total value, it will change and will not increase the value. And will not reduce the value. Therefore, some people describe that foreign exchange trading is a “zero-sum game”, or more precisely a transfer of wealth. In recent years, more and more funds have been invested in the foreign exchange market, and the volatility of the exchange rate has been expanding. The scale of wealth transfer has become larger and larger, and the speed has become faster and faster. It is calculated based on the daily transaction volume of 1.5 trillion US dollars of global foreign exchange. A rise or fall of 1% means that 150 billion yuan of funds will be exchanged for new owners. Although the foreign exchange rate varies greatly, no currency will become waste paper. Even if a certain currency keeps falling, it will always represent a certain value unless it is declared abolished.