foreign exchange

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foreign exchange


Foreign Exchange Short title FX , Is the world's largest financial market. Forex trading is the trading of one currency relative to other currencies. Foreign exchange market continuously from Monday to Friday 24 Hour transactions Global forex daily trading volume is equivalent to 3 Trillions of euros.

Foreign exchange market relative to the stock market more active and to OTC The transactions, which means that the currency is not traded on any Exchange. Although most foreign exchange transactions in London, New York and Tokyo, but not a major trading city. This is a truly global market.

Foreign currency compared to other markets, due to its high liquidity, highly individual investors of all ages. You can make Forex trading via the Internet at any place. Forex traders by buying and selling a relative to other currencies in the rise or fall of currencies to seek price difference profit.

Forex traders often benefit from higher liquidity and price fluctuations from a large number of buyers and sellers. Forex macro factors influence the price. If the Central Bank's latest decision relative to the stock market, will more directly affect the foreign exchange market. In Forex trading, you need to evaluate whether one currency relative to another currency is worth more or less valuable.

Forex trading definition

What is the Foreign exchange ?

There are many different countries in the world, flows with different Currency For example, in Japan is the Yen , in United States dollars , in the United Kingdom is Sterling In Germany and France is Euro , And so on.

Exchange between these currencies is " Foreign exchange transactions "Also known as" foreign exchange ". "Foreign currency" means "foreign exchange". Seriously said, foreign exchange is "international transaction payment instrument".

Forex trading is the exchange of one currency with another currency. "Foreign exchange trading" is also buying a pair of currency pairs in one currency and selling another currency. Foreign Exchange is in the form of monetary transactions, for example Euro / US dollar (EUR/USD) or US dollar / Japanese Yen foreign exchange market, also known as "Forex" or "FX" market, is the largest financial market in the world, a daily average of more than 4 trillion dollars on turnover of funds – Equivalent to the sum of all stock market transactions in the United States 30 times.

In China, the main place of Exchange Bank. For example, small Shenyang plans to buy Britain's Scottish kilts, Spring Festival evening show. He had to go to a bank in China, pay RMB equivalent amount in Exchange for the pound. Here u is the "foreign exchange".

Finally, chose Bank of China Beijing Wangfujing sub-branch in Shenyang, 300 RMB for 30 pounds. Shenyang a pound and the Yuan and Bank of China "foreign exchange trading".

When Exchange £, pound and the Renminbi exchange rate is " Exchange rates ", Also called" Foreign exchange rate "。

"Exchange rate" is the rate of exchange between different currencies, or the "currency" of a currency's price. It in fact refers to the country's economic strength.

In foreign exchange trading, "buying" what? "

Very simple, Forex trading, trading is "money"!

The sale of " money "? It sounds confusing, say, going to the market to buy spinach, that everyone knows. Spinach is a visible and tangible business, this business of "money" in Forex trading is what will matter?

You bought a country's currency is to buy a stake in the country. And buy shares of a public company. For example, the dollar's price is equivalent to the US's current and future economic strength of the expected.

When you buy, you bought the American economy "shares". You are confident, bet the US economy definitely healthy, and growing faster than the market expected. United States economy really live up to expectations, and fully meet your expectations. Then the dollar usually rises, began to rise. At this time, you have to sell the dollar in the foreign exchange market, you will reap the profits.

Forex trading, that is so profitable -- according to the prediction of exchange rate, and decide to buy or sell a currency.

Sale is the "currency pair"

Forex trading is the "currency pair" deal.

In Forex trading, you buy a particular currency, you sell another currency at the same time. We often see the pair quoted from the trading platform -- EUR / USD, GBP / JPY. They Flash, suggesting that they were actively traded currencies.

So, in the foreign exchange market, "currency pair" became the object of foreign exchange transactions. People from buying or selling, is the "currency pair"!

"Currency pair" fluctuations between, like an interesting tug of war competition. For side of every currency, riveting enough strength to pull. Which country's economic strength, which country's currency is more energetic, more reeling opponent. Between them, and formed the fluctuation in exchange rates.


Market size and liquidity

No birth before the Internet, want to buy shoes, have to go to the Department store. People in the mall to shop around, choose Italian shoes. Usually these department store is located in the heart of the city, where the flow of people and trade good.

Later MA in Hangzhou had an idea, launched the "online mall". With this online store, Department store will have a new rival. This online shop, your shadow in the center of it at all, hide it where is it? Look at Maverick after 90, the mouse points a few times, beautiful shoes and sent her to the House. It makes MOM and dad don't understand, this is what's wrong with that? Even the stores don't have to, the Internet can get! Internet is Ray's great!

In fact, financial transactions and buying shoes almost makes sense. Just some of the terminology is very fancy, making people feel great. Here, let us talk about stock trading.

Stock trading was born 400 years ago in the Netherlands, when scientist grandfather's grandfather invented electronic networks are not born. People have gone over to a place called "the stock exchange" place, where buying and selling stocks. Later the stock exchange has invented a set of rules to regulate trade practices. As stock trading is in "Exchange", also known as "site" deals. Last century, launched an online stock trading on the stock exchange, but underneath it is service in the field of trade. Just so people don't have to brave the storm runs Exchange, you can leave the list at home next to the Exchange.

As above said, "the stock exchange" is the center of trading places. Chinese people buy and sell stocks, through the stock exchanges in Shanghai and Shenzhen. People buy and sell stocks in the United States, through the New York Stock Exchange (NYSE) exchanges.

Forex and stock trading are not the same. Foreign exchange transactions appear in the 70 's of last century, when phone has emerged, through telephone, fax, computers and other equipment, such as foreign exchange trading parties can form a free market. Electronic equipment can easily get things, then there is no selected a piece of land, then pushed bricks and tiles to build a "currency trading".

Have said, like online "Mall" bypassing the downtown department stores. The same truth, foreign exchange traders to circumvent "the Exchange", directly in the online trading exchange – primarily by computer, occasionally by telephone order. Because it does not require "the Exchange Company", also known as foreign exchange transactions "OTC". The OTC, there is a special term-"OTC transactions" (Over the counter).

Only needed communication equipment and computers, daily foreign exchange transactions 24 hours per week 5 day sale. Start trading foreign exchange markets every day from Sydney, with the rotation of the Earth, every "foreign exchange trading" business day then begins. At present, about 30 more "foreign exchange trading". In these centres, the number of sale and purchase of foreign exchange is very large. According to the traditional geographical division, can be divided into three in Asia, Europe and North America, one of the most important of which are in London, New York, Tokyo, Hong Kong, Singapore, Frankfurt, Zurich, Paris and Sydney, and so on. In addition, some emerging regional foreign exchange centre, such as Cairo and Bahrain, Panama, also have emerged and matured.

On the foreign exchange market has become the world's largest and most popular financial markets. According to the Bank for international settlements, 2010 year statistics, transactions in the foreign exchange market every day up to 4 trillion dollars!

US dollars are the most traded currency in the world, accounting for 89.4% traded shares. Euro is a distant second place, holds 39.1% shares. Yen came in third, share is 19.0%. Description 89.4% Forex trading directly uses the dollar,39.1% trading directly with the euro. Data show that once again, dollar, euro and other major currencies remain the main force of foreign exchange transactions.

Note that each foreign exchange transaction involves two kinds of currency trading, so that when we share, need to 200% instead 100%.

Assuming the foreign exchange market took a total of three deals.

First is the 1 trillion dollars in dollar / renminbi transactions. This trading credited dollar share and accounted for in the share of RMB.

Later a 5 trillion dollars in dollar / Yen trading, the deal included $ share, also counted towards the yen a share.

Last was 1 billion Swiss franc Swiss franc / The Australian dollar Transactions,1 billion trading against the Swiss franc into Swiss francs, also included in the Australian dollar. US dollar / Swiss franc exchange rate is 1:1, with Exchange rates, the1 billion Swiss franc volume equivalent to 1 billion dollars in trading volume.

A total of 7 billion dollars in deals, including dollar trading volume amounted to 6 billion dollars, accounting for 6/7, Renminbi trading volume is 1 billion dollars, accounting for 1/7, Yen trading volume was 5 billion dollars, accounting for 5/7. Swiss franc 1/7Australian dollar 1/7. This means that the global trading volume,6/7 foreign exchange directly using the $5/7 directly using the yen,1/7 directly using the Yuan,1/7 direct use of the Swiss franc,1/7 directly using the Australian dollar. RMB, US dollars, Japanese yen, Swiss franc and Australian dollar total individual shares, reached 14/7=200% statistical percentages.

Each volume will fall on the statistics of the two currencies, each volume is counted twice, so the 200% alternative 100%.

A simple example, revealed stunning fact – the dollar is the currency of the King,84.9% foreign exchange directly using dollars!

Dollar is King

"The dollar" coverage is always there, where is the star currency. Dollar is the currency of the world must pay attention to. As long as the dollar half the major currency pairs traded, and the main currency of global trading volume three-fourths, then the dollar is worthy of the King.

Following the world's reserve currency, and it reveals the secret – in the eyes of Governments, the dollar is still King of the currency world!

In fact, according to statistics from the International Monetary Fund, in official foreign exchange reserves in the world, the dollar accounted for 62% ! Central Bank in almost every country, large enterprises and foreign investment dollars, dollars no doubt the focus of attention!

Following reasons eloquently "the dollar is King" reasons:

The United States is the world's largest economy.

Dollar is the most important reserve currency in the world.

The United States has the world's largest and most active financial markets.

Under a system of separation of powers, councils are quite stable in the United States.

The United States is the world's only military superpower.

Dollars is required in many international trade currency. A case study of oil, priced in dollars, buying oil from Saudi Arabia, Mexico, it is necessary to use dollars. If Mexico is not the dollar, it was necessary to put Mexican pesos into dollars.

"Speculative" popular Forex trading

In the foreign exchange market, some export-oriented enterprises, according to the needs of international trade, will do some foreign exchange transactions. For example, Boeing selling aircraft to Germany 10 large plane, received from the Germans the euro and Boeing aircraft to determine the euro relative to the dollar will rise, then Boeing will do? It can wait patiently, wait until the appreciation of the euro, euros can be exchanged for more dollars, the export business is even more value.

But for businesses, is more important to avoid the risk of exchange rate fluctuations, rather than profit from foreign exchange markets, so they used special methods of safe-haven to Trade Forex. For example foreign exchange swaps, forwards, etc. These measures, naturally produced a volume of foreign exchange transactions. This Forex volume very small percentage for hedging purposes, most foreign exchange transactions have only a simple objective--speculate!

Speculation and hedging on the contrary, it is not avoiding foreign exchange risks, but to accept or use the exchange risk. Changes in the exchange rate, just as speculative profit, profit provides the opportunity. In the foreign exchange market, speculative trading account Forex trading 90% country!

Transactions in the foreign exchange market every day up to 4 trillions of dollars, currency trading will soon be sold, some large amount of eye-opening. Also, because trading volume is so great, either do not have enough financial resources to manipulate the market.

Forex facts

2010 Years 9 months, 20 days, the Japanese Government spent 20,000 billion yen intervention, while devaluing the yen in a day of 3%, but the Japanese Government is only temporary impact on exchange rates, but not currency manipulation. Global daily Forex trading volume was 4 trillion dollars, equivalent to Japan a year GDP 80%, Japanese Government cattle, cannot continue to take out large sums of money, long-term impact of the Yen's exchange rate.

In foreign exchange speculation, there was a powerful force-hot money (Hot Money). Hot pursuit of high returns, with amazing speed. Once you have found the profit-making opportunities, there will be a rapid influx of; if you find profit opportunity has passed, these capital can quickly shed. Just like the foreign exchange market turmoil, often national exchange rates, interest rates have a big impact.

Money never sleeps, in and out are good!


Reasons for Forex trading

Foreign exchange Market is the largest financial market in the world, daily volume of up to 6 trillion USD In recent years, a large number of stocks, futures traders in the Forex market, further promoting the Exchange become the focus of global investment. Forex trading what is the charm of this?


1 And low transaction costs.

No stamp duty, no hefty commissions, no broker fee, and profits in the Forex broker only coming from the price spreads. EUR/USD 1.4224/1.4228, 4 -point spreads are trading costs. Stock trading will usually charge a Commission, buying and selling a back and forth, the Commission will be charged twice. In contrast, much smaller foreign exchange transaction costs.

2 Regardless of bear market, bull market, profit opportunities.

Bi-directional transaction Exchange is very flexible, without any restrictions, Forex traders can freely benefit from market gains and declines to make a profit.

3 And the24 -hour global trading

The Forex market is a 24 -hour stagnation in global markets, traders can be used for one's own time. This is one reason why many people choose chaohui. Meanwhile, more and more people begin to use the stock market closed for trading Forex, think of it as a channel to spread the risk.

4 , High leverage, to deduct

The leverage available in Forex trading is usually stock trading 50-100 times. The effectiveness of foreign exchange transactions to deduct, is far better than stock.

For example, a Forex broker offers 100:1 leverage, which means 500 dollars can buy and sell 50,000 dollars Currency

Of course, we must recognize that leverage is a double edged sword, it will enable traders to profit quickly and easily increase the risk.

5 , Instant delivery unlimited

The foreign exchange market is a paradise for short-term traders, as traders throughout the day to free access, instant transactions, deliver profits at any time. And stock traders who want to day traders, will face many restrictions.

6 And no one can manipulate the market

Forex market trading volume is so great that daily trading reach 6 trillion dollars, with many participants, including the world's major commercial banks, central banks, traders and so on, even the Central Bank cannot control prices. For traders, the foreign exchange market is a fair place.

7 And low threshold

You might think that Forex trading requires large amounts of capital. Actually make you surprisingly, rather than trading stocks, options and futures, Forex trading threshold is much lower. Only 100 dollars, you can have a Forex trading account.

8 , A wealth of free learning resources

Almost without exception, Forex brokers offer free demo accounts. Real-time exchange of information, charts, services and learning resources accessible.

Forex beginner, these are all valuable objects. Smart traders understand that "there is no free lunch", they will devote themselves to learning, first before the real trading "weapons" ready, with a blunt knife appears not in the fierce gun battle.


Forex trading hours

The world's major Foreign exchange This market open time open then close, they integrated through computer networks, market participants can trade around the world, foreign capital flows smoothly, the market Exchange rates Minimal differences, formed a global integrated operation, run all the unity of the international foreign exchange market. Time, please look at the table below.



Opening hours (GMT)

Closing time (GMT)



11 :00

19 :00


12 :00

20 :00

Hong Kong

13 :00

21 :00



08 :00

16 :00


08 :00

16 :00


09 :00

17 :00

North America

New York

12 :00

20 :00

Here are three trading sessions Currency Volatility

Currency pairs

Tokyo time


New York Times

















































Forex money

Foreign exchange transactions In the process, How to make money?

For example: in Europe and the currency as an example, assume that Euro / USD =1.1800

At this point, you save 11,800 for us $ 10,000 euros.

Two weeks later, the euro / us $ =1.2500.

At this point, you sold two weeks ago to hold 10,000 euros switch to 12,500 US dollars.

At this time, you will have 12,500 dollars, compared to two weeks ago, 11,800 dollars, you more than 700 dollars.

Spreads and

According to industry practices, Foreign exchange rate Price is usually made up of five digits, from the past to the left on the right, first known as "x ", which constitute the smallest unit of exchange rate movements; the second is called "x- ten points ", and so on.

If the euro / us $ 1.1010 1.1015, euro relative to the dollar, up 5 points. If the dollar / yen from 100.00 to 100.10, is compared with the yen, dollar, an increase of 10 points.

Currency " revaluation " and " depreciation"

Need to see which economies are performing well, which did badly the economies. If an economy is doing quite well, so the country's currency will be strengthened and become more valuable. Because, if it is better, there are more countries trust the currency.

Euro / US dollar

The euro is the base currency, and naturally, we have a " euro " as the Center, began trading.

If you think the American economy will weaken, a troubling prospect, is " failure failure ", then the dollar naturally well where, while eurozone economic prosperity, has great potential, is " handsome guy ", naturally, will grow further in value of the euro. End of you have in mind, began to " buy " the euro / dollar, then you can patiently wait, after the euro rise against the dollar and reap profits.

If the economy is bullish, American businesses thrive, and euro-zone countries was sleeping pig-like and torpor in the Western world, then the euro relative to the dollar will be devalued. You need to " sell " the euro / dollar and wait for the fall of the euro.

Bullish on euro / dollar, you need to use " buy " the euro / dollar trading orders. Bearish on euro / dollar, you need to " sell " the euro / dollar " orders.

US dollar / Japanese yen

Dollar is the base currency, is the Centre of trade. 85 years when1 dollars for 260 yen after ten years,1 $ only 80 yen. For ten years, dollar or failure, can only change back to the previous less than 3 ppm 1 yen.

Japan's economic prosperity, appreciation of the yen will have a momentum. Japan's rapid economic growth after World War II, rapidly established large industrial power, a mighty economic power. In this context, since 1985 years from the continued appreciation of the yen, appreciation of the yen against the dollar, three times in ten years.

To cite an example, assuming the dollar / Yen exchange rate 1 US dollar =260 Japanese Yen become 1 dollar =80 Japanese yen, and the announcer would say " dollar fell against the yen ", or " Yen ", That's right.

Why? Earlier, in order to Exchange 1 $, need 260 yen, now, with only 80 yen, Japanese people also can save 180 yen. By contrast, the dollar worthless, this is called " the dollar ", rising Yen worth, called " Yen ".

Bullish on dollar / yen, you will need to use " buy " the dollar / Yen trading orders. Bearish on dollar / yen, you will need to " sell " the dollar / Yen " orders.

Us $ / Swiss franc

"Dollars must be strong! Swiss franc is so high it?! " If you think so, you can " buy " US dollar / Swiss franc. Here, the US dollar is the base currency, the Swiss franc is the currency. You use the " buy " USD / CHF trading order, wait, hoping against the appreciation of the Swiss franc.

"President Barack Obama's new deal too bad, what she thought was a bombastic guy! " You make no secret of disappointment in the United States, naturally, is not supported by the economic power of the United States dollar also weakens. You can use the " sell " US dollar / Swiss franc order. Then, you will be able to travel to Switzerland, waiting for the devaluation of the dollar in the sky blue of the Alps.

Leverage has played an important role in human history. When new men used a lever to move the stone, who used leverage to build the great pyramid of Egypt. The ancient Greek mathematician Archimedes even bold statements " give me a place to stand, you can move the Earth!"

In foreign exchange trading, leverage also played a powerful force. Just hundreds of dollars by " leveraged ", you will be able to mobilize tens of thousands of dollars in funds. Choose what kind of leverage, depending on your trading preferences.

Buy 1 standard lot EUR / USD (EUR/USD=1.000), for example, if you want to buy the euro, according to the exchange rate at this time, you do not need to sell 100,000 dollars. You can use the " leverage ", in 100:1 leverage, for example, if you sell 1,000 dollars, you can buy 100,000 euros. If you use the 200:1 lever, you simply sell 500 dollars on the line. In this case, you have set up 100,000 positions of the euro, the euro / dollar fluctuations, your accounts 10 USD of profit or loss.

This is leverage. Leverage, the higher you need to put the " margin occupied " less. Brokers on the trading platform, clearly showing the amount of margin required.

Is in need of attention, leverage is a double edged sword, leveraged foreign exchange trading can expand your profits can increase your losses. Through the lever, you can buy a greater number of currencies, when currency appreciation, you earn more. But if the currency devalued, you buy more and greater losses.

Profit and loss

As mentioned above, the" exchange offer " is based on " currency pair " form. In every transaction, to sell a particular currency in Exchange for another currency. " Currency pair " reflects how much a currency to another currency.

When you buy a currency, this currency with another currency than traders expected, this currency will rise when he sold the currency, he looked forward to this currency will depreciate in value.

When euro / dollar offer to 1.3705 Shi means that 1 euro for 1.3705 dollars. If you buy ten " standards " euro / dollars, is equivalent to buying 1 million euros, while his 1.3705 sold dollars. If the euro / dollar is up 200 points, trading at 1.3905 selling can be profitable. But if the euro / dollar fell 200 points to 1.3505, that is, losses.


On interest

These are effects of exchange rate movements on the trading profit and loss. In addition to exchange rate changes, currency interest rates will have an impact on trading the final profit and loss. Traders need to advertise interest brokers charge based on the criterion of. In the getting started course, we will not go into details.

Market orders and pending orders

Some of the basic types of orders , are all brokers provide, such as market orders.

Market order: buy or sell at the current market price of the Exchange order. For example , EUR/USD current price is 1.2140, if you want to buy at the price of the euro , you will need to click on the trading software such as " buying " a button , then at the moment of your order will have been generated. Good price, then click on the deal, it's as simple as that! The only difference is buy or sell.

Other than market orders, there is one of the most important orders -- orders.

Pending orders: refers to " price " orders to buy or sell. Such orders, you will be able to " specify the price " to buy or sell currencies. For example , EUR/USD current price be 1.2050,and you think the price is breaking the 1.2070 worth buying. At this point, you have two options, one is sitting in front of the computer waiting until prices rise to 1.2070 buy; there is also an easy way, you can create one now at 1.2070 buy EUR/USD order, literally, belonging to the order of " stop-loss pay ", when prices rise to 1.2070 when your trading software will automatically help you buy.

Pending transactions include four types:

1. Buy Limit Order ( buying price )- pay hanging below the current price   buy low BUY LIMIT

2. stop pay - hanging above the current price to pay   high prices to buy BUY STOP

3. limit sell orders - hanging above the current price sell   sell SELL LIMIT

4. stop-loss sell orders - hanging below the current price of sell orders   at a low price SELL STOP

Stop loss and take profit orders

Stop order: the order when the market price at or after the specified price when buying or selling. Stop orders to limit traders ' losses. When prices began to run toward the nonprofit, and can minimize the loss. If the price reaches the set price line, traders will automatically close out positions.

For example: most of the orders were for the purpose of protection. We at 1.1888 opened a single location, we take into account if the market direction errors of judgment losses up 10 points, then we can set a stop-loss price to 1.1878 stops.

Take profit: profit after market quotes in order to achieve the desired level of profit, and profit-taking.


Trailing stops: the order and price trends for mobile synchronization and reduces losses due to callback, traders don't need to stare. Trailing stop price will automatically change with the market quotes, make a corresponding move, and this is handled automatically by the software. Even when your network is down, your order is still be protected.