The mystery of the foreign exchange trading in the difficult problems
Although foreign rebateforexbroker Forex Rapid Rebate the worlds largest f rebateforexancial ForexRapidRebate, but it is still a relatively unfamiliar cashback forexa for retail traders, until more than a decade ago online trading began to prevail, the past foreign exchange by large financial institutions, multinational groups rebateforexfee hedge funds dominated the situation to change individual investors are also eager to share information about the foreign exchange market whether you are Foreign exchange trading novice, or need to revisit the basics of foreign exchange trading, this article is believed to answer many of your doubts, because these are the following questions about uncovering the foreign currency trading quandaries Forex trading quandaries a: What is the difference between the foreign exchange market and other markets? Foreign exchange trading and stocks, futures or options is not the same, foreign exchange trading is not in a regulated exchange it is not controlled by the central government there is no clearing center to ensure that transactions are carried out, nor is there any arbitration body to resolve disputes all members trade with each other on the basis of their credit contracts In essence, the worlds largest and most liquid market relies on the In essence, the worlds largest and most liquid market relies on nothing more than a token handshake and cooperation between each other This particular model must have initially confused investors accustomed to the formal exchange model, but in reality, it has worked well, as participants in the foreign exchange market compete with each other and must remain cooperative, self-regulating to keep the entire market functioning efficiently and, in each country and region, official regulatory bodies have been formed Therefore, it is very important for retail forex customers in any country to choose to work with a regulated broker Before you get the impression that forex is the Wild West of the financial world, we should also tell you that the forex market is the most liquid market in the world, it trades 24 hours a day, 7 days a week, and there is very little in the way of quotes The size and scope of the interval it has (from Asia to Europe to North America) makes it equally the most accessible financial market Forex trading quandary number two: Where are the fees in Forex trading? Investors who trade stocks, futures or options use brokers as intermediaries for trading brokers pass the customers order to the exchange and execute it according to each customers requirements therefore, the broker charges the cost of this service The foreign exchange market has no service fees forex brokers are also called dealers forex brokers do not charge fees. The source of their profit is the bid/ask spread In forex, investors cant get the bid/ask spread as in the market where trading is done on the exchange Some brokers already include the spread in their offer and therefore dont charge additional fees or commissions, and investors get all the profit However, since traders have to accept the bid/ask spread, it also makes scalping more difficult Forex trading quandary #3: What are pips in forex trading? Pips is the percentage point, is the smallest increment in foreign exchange trading in the foreign exchange market, the offer is usually to the last four decimal places For example, the price of a piece of soap in the supermarket is $1.20, and in the foreign exchange market this soap offer is writing 1.2000 decimal points after the fourth digit of a unit of change is a point ;Forex Trading Quandary IV: What are you really buying and selling in the Forex market? The simplest answer is nothing retail foreign exchange market is actually a speculative market, and there is no substantial currency exchange some transactions are actually just information inside the computer, and the transaction will also exit because of the market price for a dollar account, all profits and losses are calculated in dollars, and recorded in the traders account nbsp;The main reason for the existence of the foreign exchange market is the need for multinational companies to exchange between different currencies However, this part of the companys daily demand for foreign exchange only accounts for 20% of the total foreign exchange market and the other 80% of transactions are speculative transactions, trading subjects are large financial institutions, well-funded venture capital funds, and even include ordinary traders who can reflect the daily economic and geopolitical events& nbsp; Forex is usually traded between a pair of currencies, so traders must also be shorting another currency when they are long all the transactions are just computer entry data, and the results are likewise not real Forex trading quandary five: What currencies are traded in the Forex market? Although some retail traders trade exotic currencies such as the Thai baht or the Czech koruna, the worlds most popular forex pairs are mainly the following four: EUR/USD; USD/JPY; GBP/USD; USD/CHF and three commodity pairs: AUD/USD; USD/CAD; NZD/USD These Currency pairs, and their combinations with other popular currencies, account for more than 95% of all speculative trading in foreign exchange Considering the small number of instruments traded, as only dozens of currency pairs and cross currency pairs are actively traded, the foreign exchange market is more concentrated than the stock market Forex Trading Doubt 6: What is Forex Arbitrage Trading? Arbitrage is the most popular trade in the foreign exchange market, whether it is the largest hedge funds or individual speculators, will try to arbitrage trading Arbitrage trading is based on the fact that each currency has an associated interest rate short-term interest rates are set by the central bank of each country, such as the Federal Reserve, the Bank of Japan, the Bank of England, the Bank of China, etc. The idea of arbitrage trading Its actually quite simple for traders to go long on a currency with a high interest rate and buy that currency with a low interest rate. However, before you rush to buy a currency with a high interest rate, keep in mind that when the arbitrage trade blows up, your losses are very quick and severe. The best time to arbitrage is at the beginning of interest rate tightening so that traders can grasp the trend when the interest rate differential opens up. I hope that investors will be careful when choosing a trading program.