Foreign exchange (FOREX) is generally divided into two investment methods, one is Real foreign exchange investment;One is Foreign exchange virtual disk trading, also called Forex Margin Trading;Compared to stock market investment, which has its pros and cons, foreign exchange investment is directed towards the global foreign exchange market, which has higher risks and greater returns.

 

Table of contents

Introduction to foreign exchange trading

Authoritative ranking of the world's top ten formal foreign exchange trading platforms

Forex trading related questions

 

Introduction to foreign exchange trading

Forex concept

Using margin trading to invest, foreign exchange investors can use the principle of leverage to win big with small, two-way trading, and flexible operations. Moreover, because it is a global market, the chance of the market being controlled by individuals or institutions is very small, so compared with the stock market Talk about being more transparent and fair.

Major Players in Forex

Participants in the foreign exchange market mainly include countries in Central Bank, commercial banks, non-bank financial institution brokerage companies, dealers and large multinational enterprises, etc.

They have frequent transactions and huge transaction amounts, with each transaction amounting to millions or even tens of millions of dollars.

Participants in foreign exchange transactions can be divided into two categories: investors and speculators according to the purpose of their transactions.

Foreign exchange account opening steps

• • Prepare account opening materials

Proof of identity

Valid identification documents, such as ID cards, passports, etc., are required to verify the investor's identity and nationality and ensure the legality and security of the transaction.

Contact information

Provide a commonly used email address and mobile phone number, which will be used to receive important information such as account verification, transaction notifications, etc.

Bank account information

Some platforms may require bank card photos or related information for subsequent fund deposits and withdrawals.

• • Choose a foreign exchange trading platform

Formality verification

Investors should first choose a regulated, reputable foreign exchange trading platform.

When choosing a platform, you should pay attention to its regulatory status, trading conditions, fee structure, etc. to ensure that transactions can be conducted in a safe and transparent environment.

It is recommended to consider brokers that have been operating in the market for more than ten years, or platforms with formal international financial regulatory licenses, such as FCA、CFTC or ASIC supervision by other agencies.

Platform features

Consider factors such as the platform’s transaction fees, transaction types, platform stability, customer service, and educational resources, and choose the platform that best suits you.

• • Apply online for account opening

Visit the platform official website

Log in to the official website of your chosen Forex trading platform. For example:Macro Global Markets It is one of the safest foreign exchange trading platforms

Fill out the application form

Find the "Account Opening" or "Registration" page and fill in personal information as required, including name, ID number, contact information, etc.

At the same time, you need to upload prepared identification documents, bank account information and other materials.

Read and agree to the agreement: Before submitting an application, you need to read and understand the risk disclosure and transaction agreement provided by the platform to ensure that you clearly understand the relevant transaction rules, fees and risks.

• • Submit account opening application and wait for review

Submit application

Submit the completed application form and required information to the trading platform.

Waiting for review

The platform will review the submitted materials, and the review time may vary from platform to platform, usually taking anywhere from a few hours to a few days.

Please wait patiently for the review results and ensure that your contact information remains open during the review period so that the platform can contact investors in a timely manner.

• • Check account information and start trading

Account opening

After passing the review, the trading platform will notify investors via email or text message that the account has been successfully opened, and inform them of the account information and password.

Deposit operation

Follow the platform’s guidelines for fund deposit operations. You can usually choose bank transfer, credit card, electronic wallet, etc. to make deposits.

Please ensure that the source of funds is legal and pay attention to the safety of funds.

Download platform

Download the trading software client (such as MetaTrader 4 or 5) from the official website of the trading platform and install it on your computer or mobile device.

Start trading

Before formal trading, you can practice trading through a demo account and become familiar with the trading platform's operating interface, order process, chart analysis tools, etc.

After that, investors can use the trading platform to perform buying or selling operations, and hold or close positions based on market conditions and their own risk tolerance.

Common foreign exchange terms

Before learning the actual introductory knowledge of foreign exchange trading, we'd better learn some jargon and terminology first; knowing these contents well will help you to trade better.

• • Major versus minor currencies

The eight most frequently traded currencies are called major currencies: USD, EUR, JPY, GBP, CHF, CAD, NZD, AUD; other currencies are called minor currencies.

USD, EUR, JPY, GBP and CHF are the five currencies with the strongest liquidity and the largest trading volume.

• • base currency

The base currency refers to the former currency pair, which represents its value relative to the latter currency pair.

For example, if the exchange rate of USD/CHF is 1.6350, then 1 US dollar can be exchanged for 1.6350 Swiss francs.

In the foreign exchange market, the US dollar is generally used as the base currency against which other currencies are measured; of course, there are exceptions, such as the British pound, the euro, the Australian dollar and the New Zealand dollar.

• • Quotation currency

The quote currency refers to the second currency in the currency pair. Because profits and losses are expressed in quotation currency, it also has a name called spread currency.

• • Spread

1 pip is the smallest unit of calculation for the exchange rate.

Almost all currency pairs are priced using 5 digits (some systems currently provide 6 digit pricing), and most of them are 1 integer and 4 decimal places. For example, 1.3720 of EUR/USD, 1 pip is the last decimal place. bit, 0.0001.

• • Bid price

The buying price is the price on the left side of the quotation, which refers to the buying price that the market can accept for a certain currency. For traders, this is the price at which the base currency can be sold.

For example, in the EUR/USD quote 1.3706/09, the bid price is 1.3706, which means you can sell 1 euro and receive 1.3706 USD.

• • selling price

The selling price is the price on the right side of the quotation, which refers to the selling price that the market can accept for a certain currency. For traders, it is the price at which the base currency can be bought.

For example, in the quote of EUR/USD 1.3706/09, the selling price is 1.3709, which means that you can buy 1 euro for 1.3709 US dollars.

• • Buy and sell spread

The difference between the buying price and the selling price is called the spread. For example, in EUR/USD 1.3706/09, the 3 points in the middle of 06/09 are the buying and selling spread of the currency pair.

• • Quote style

Exchange rate quotes in the foreign exchange market generally use the following format:

Base currency/quotation currency: Bid price/Ask price.

• • transaction costs

The importance of the buying and selling spread is that it directly determines the one-way transaction cost in foreign exchange transactions.

For example, the exchange rate of EUR/USD is 1.3706/09, then the transaction cost is 3 points.

Transaction cost = selling price – buying price

• • cross currency

Cross currencies are currency pairs for which the U.S. dollar does not appear in quotes.

Cross-currency is unstable, and its trading process involves the trading of two U.S. dollar-related currencies.

For example, buying EUR/GBP is equivalent to buying EUR/USD and selling GBP/USD.

Generally, cross-currency transaction costs are relatively high.

• • margin

After you open a margin account with a broker, you need to deposit a minimum margin as required by the broker, which may range from US$100 to US$100,000.

Every time you place an order, the broker will calculate the initial margin required for the transaction based on your trading currency, trading volume, and current price, and debit it from your account.

For example, let's assume you have a mini account that's just 200:1 and can trade mini lots, which is 10,000 units of the currency.

When you trade 1 mini lot, the required margin is US$10,000 / 200 = US$50.

• • Lever

Leverage refers to the proportion by which your capital is magnified, allowing you to operate a large amount of capital for investment with a small amount of capital.

Different brokers provide different leverage ratios, ranging from 1:2 to 1:400.

How to calculate profit and loss in foreign exchange trading

In foreign exchange trading, the calculation of profit and loss mainly depends on the following factors:

• • Trading volume (lots)

The standard unit of trade per lot is usually 100,000 units of the base currency.

• • Point Value

The pip value is the currency value corresponding to a one-point change in the exchange rate (usually 0.0001).

• • Exchange rate changes

The magnitude of the exchange rate fluctuation determines the profit or loss of the transaction.

Profit and loss calculation formula

Profit and loss = transaction volume × point value × exchange rate change (points)

Suppose you trade 1 lot (100,000 units) of EUR/USD, the pip value is $10 (assuming 1 pip = 0.0001, and 1 pip = $10), and the exchange rate rises from 1.1000 to 1.1050, a change of 50 pips.

　　Profit and loss = 1 × 10 × 50 = $500

Chart Example

Trading volume (lots)	Pip Value (USD)	Exchange rate change (points)	Profit and loss (USD)
1	10	50	500
0.5	10	50	250
2	10	50	1000
1	10	-30	-300

Chart Description

• • Trading Volume

The number of lots traded, 1 lot = 100,000 units.

• • Point Value

Each point is worth, usually $10.

• • Exchange rate changes

The change in the exchange rate in points. A positive number indicates a profit, while a negative number indicates a loss.

• • Profit and Loss

The profit or loss amount calculated according to the formula.

Through the above formulas and charts, you can clearly calculate the profit and loss of foreign exchange transactions. Trading volume, pip value and exchange rate movements are key factors in determining profit and loss.

Forex Trading Hours

The foreign exchange market is the world's largest financial market. Due to its decentralized nature, trading hours cover almost 24 hours a day. The following are the trading hours of major foreign exchange markets (taking Beijing time as an example):

• • Sydney Market

Opening time: 06:00

Closing time: 15:00

• • Tokyo Market

Opening time: 08:00

Closing time: 16:00

• • London Market

Opening time: 15:00

Closing time: 23:00

• • New York Market

Opening time: 20:00

Closing time: 04:00 (next day)

• • Overlapping trading sessions

London-New York overlap: 20:00 – 23:00 (most active trading, highest liquidity)

Tokyo-London overlap: 15:00 – 16:00

• • Weekend Closed

The foreign exchange market is closed on weekends (Saturday and Sunday), from the close of the New York market on Friday to the opening of the Sydney market on Sunday.

• • Precautions

Foreign exchange market trading hours are subject to adjustment due to summer and winter time.

The trading hours of different brokers may vary slightly, please refer to the specific platform.

How to place an order for foreign exchange transactions

In foreign exchange trading, placing an order is the core operation of executing a transaction. The following are common methods for placing foreign exchange orders:

• • Market Order

Definition: To buy or sell immediately at the current market price.

Applicable scenario: When traders want to trade immediately.

Features:

Fast execution speed.

The transaction price may be slightly different from the expected price (slippage risk).

• • Limit Order

Definition: Set a specific price, and when the market price reaches that price, the order is automatically executed.

Applicable scenarios: When traders want to enter or exit the market at a better price.

Features:

Ensure that the transaction price is better than or equal to the set price.

There is no guarantee that the transaction will be completed (the market price may not reach the set price).

• • Stop Loss Order

Definition: Set a specific price, and when the market price reaches that price, the order is automatically executed to limit losses.

Applicable scenarios: Used for risk management to prevent losses from expanding.

Features:

Converts to market order after being triggered.

Slippage may occur due to market fluctuations.

• • Stop Limit Order

Definition: A combination of a stop order and a limit order. When the market price reaches the stop price, the order is executed as a limit order.

Applicable scenario: You want to control the transaction price when stopping loss.

Features:

Avoid slippage, but do not guarantee a deal.

• • Trailing Stop Order

Definition: The stop loss price automatically adjusts as market prices change, locking in profits or limiting losses.

Applicable scenarios: Used for trend trading, protecting profits while letting profits run.

Features:

The stop loss price is adjusted dynamically with market fluctuations.

Suitable for volatile markets.

• • OCO Order，One Cancels the Other

Definition: Place two orders at the same time (such as a limit order and a stop order). When one order is executed, the other order is automatically cancelled.

Applicable scenarios: used to set take profit and stop loss at the same time.

Features:

Improve transaction efficiency and reduce manual operations.

• • IF-DONE Order

Definition: After the main order is executed, another order (such as take profit or stop loss) is automatically triggered.

Applicable scenarios: used for automated trading strategies.

Features:

Suitable for complex trading plans.

• • 掛單(Pending Order)

Definition: A pre-order when the market price has not reached the set price. It is divided into the following types:

Buy Limit: Buy below the current price.

Sell ​​Limit Price: Sell above the current price.

Buy Stop: Buy above the current price.

Sell ​​Stop: Sell below the current price.

Applicable scenarios: Used to plan transactions in advance.

• • Instant Execution

Definition: An order is executed immediately at the current market price. If the price changes too quickly, the trader can choose to accept the new price or cancel the order.

Applicable scenarios: Suitable for short-term traders.

Features:

Execution is fast, but may be re-quoted due to price fluctuations.

• • Market Execution

Definition: An order is executed at the current market price, regardless of how the price moves.

Applicable scenarios: Suitable for traders who have high requirements for execution speed.

Features:

Transaction is guaranteed, but slippage may occur.

• • Precautions

Slippage: When the market fluctuates drastically, the actual execution price of an order may be different from the expected price.

Liquidity: Currency pairs with high liquidity (such as EUR/USD) have less slippage, while currency pairs with low liquidity may have greater slippage.

Trading platform: The order placement methods supported by different trading platforms may vary slightly, so you need to be familiar with the platform rules.

Popular Forex Trading Investment Currencies

• • USD

The U.S. dollar (currency code: USD;) is the official currency of the United States of America. The competent authority for issuing U.S. dollars is Congress, and the specific issuance business is handled by the Federal Reserve Bank.

After World War II, European countries reached an agreement with the United States to use the US dollar for international payments. Since then, the US dollar has been widely used as a reserve currency in countries outside the United States and eventually became an international currency.

• • EUR

The Euro (currency code: EUR;) is the currency of 25 countries including the European Union. On January 1, 1999, a unified monetary policy (Single Monetary Act) was implemented in the EU countries that adopted the euro, and in July 2002, the euro became the only legal currency in the euro area.

The euro is managed by the European System of Central Banks (ESCB), which consists of the European Central Bank (ECB) and the central banks of eurozone countries.

• • JPY

The Japanese yen (currency code: JPY;) is the official currency of Japan and is often used as a reserve currency after the US dollar and the euro.

• • GBP

The British pound (currency code: GBP;) is the national currency and monetary unit of the United Kingdom. The pound sterling is primarily issued by the Bank of England, but there are other issuers as well. The symbol most commonly used to represent the British pound is £.

As the United Kingdom was the first country in the world to implement industrialization and once dominated the international financial industry, the British pound was once the most widely used currency for pricing and settlement in international settlement operations.

After World War I and World War II, Britain's economic status continued to decline, but due to historical reasons, Britain's financial industry is still very developed and the pound sterling still occupies a very high position in foreign exchange transaction settlement.

• • AUD

The Australian dollar (currency code: AUD;) is the official currency of the Commonwealth of Australia and is issued by the Reserve Bank of Australia.

In the foreign exchange market, the Australian dollar is currently the fifth most traded currency in the world: after the US dollar, euro, yen and pound sterling, accounting for 6% of the total trading volume.

• • CHF

The Swiss franc (currency code: CHF;) is the official currency of Switzerland and Liechtenstein and is issued by the Swiss central bank.

Due to Switzerland's stable development, its exchange rate changes depend on the inflow and outflow of hot money and the direction of the US dollar, and the cycle is relatively obvious, so the Swiss franc is the king of short-term investments.

• • CAD

The Canadian dollar, abbreviated as CAD (currency code: CAD) is the official currency of Canada and is issued by the Bank of Canada.

• • NZD

The New Zealand dollar, commonly referred to as the New Zealand dollar (currency code: NZD;), is issued by the Reserve Bank of New Zealand, the central bank of New Zealand, and is the legal tender of New Zealand, the Cook Islands, Niue, Tokelau and the Pitcairn Islands.

Foreign exchange trading strategy reference

• • Trend Following Strategies

This is a strategy that trades based on market trends.

The foreign exchange market tends to show clear trends, whether they are rising or falling.

Use technical analysis tools such as moving averages, trend lines, etc. to identify the direction of the trend.

When the trend is established, traders enter the market in the hope of making a profit. For example, if the EUR/USD exchange rate shows a clear upward trend, traders will choose to buy EUR and sell USD.

• • Reversal Trading Strategies

In contrast to trend following strategies, reversal trading strategies aim to capture reversal points in market trends. This strategy requires traders to have a high level of market sensitivity and judgment.

Commonly used technical analysis indicators include the relative strength index (RSI), stochastic indicator (KDJ), etc. When these indicators show that the market is overbought or oversold, it may signal that a trend reversal is imminent.

• • Range Trading Strategy

Applicable to situations when the market is in a volatile range. Traders identify upper and lower price boundaries and buy when the price is close to the lower boundary and sell when the price is close to the upper boundary.

However, this strategy requires accurate judgment of the range, otherwise it may lead to trading losses.

• • News Trading Strategies

The foreign exchange market is very sensitive to news such as economic data and political events. Traders closely monitor important news releases and take trades based on the discrepancy between expected and actual data.

For example, if a country releases better-than-expected economic growth data, it may cause the country's currency to appreciate, and traders will buy accordingly.

• • Carry Trade Strategy

Take advantage of interest rate differences between currencies of different countries to make profits. For example, borrowing a low-interest currency and buying a high-interest currency to earn the interest rate differential.

However, this strategy needs to consider the risk of exchange rate fluctuations. If the exchange rate changes in an unfavorable direction, it may offset the interest rate spread or even lead to losses.

A brief comparison of several strategies

Trading strategies	Features	Applicable market conditions	Risk factors
Trend Following Strategies	Follow the market trend and go with the flow	There is a clear trend in the market	Misjudgment of the trend may lead to greater losses
Reversal Trading Strategies	Capture trend reversal points, large profit margins	Market trend is about to reverse	Misjudgment of reversal, high risk
Range Trading Strategy	Buy low and sell high in a range	The market is in a volatile range	Wrong range judgment, breaking through the range causes losses
News Trading Strategies	Quick response to news events	When important news is released	Wrong range judgment, breaking through the range causes losses
Carry Trade Strategy	Profit from the interest rate differential	Interest rate differences are obvious	Exchange rate fluctuation risk, narrowing interest rate spread

• • Notice

Every trading strategy has its strengths and limitations, and no single strategy is successful in all market conditions.

Traders should choose a trading strategy that suits them based on their risk tolerance, trading experience and market conditions, and continue to learn and improve.

Key factors affecting exchange rate changes

The following are the main factors that affect exchange rate changes:

• • Balance of Payments

The balance of payments is one of the factors that affect exchange rate fluctuations.

• • inflation

As we all know, inflation will have a great impact and change on a country's exchange rate. If a country's inflation rate is higher than that of a foreign country, then the country's currency will depreciate and the foreign exchange rate will rise relatively.

There is a general economic law that the value of a country's currency will increase if its inflation rate remains low.

• • Foreign exchange reserves

Foreign exchange reserves will also have an important impact on a country's exchange rate. If a country has higher foreign exchange reserves, the country's currency interest rate will increase.

• • interest rate

The different interest rate levels in different countries have different impacts on foreign exchange rates. Interest rate changes will promote short-term capital flows and lead to changes in foreign exchange demand.

At the same time, if a country has higher interest rates, it will attract foreign investment, causing the exchange rate to rise.

• • Investor psychological expectations

Investors' psychological expectations are particularly prominent in the international financial market and play a crucial role in exchange rate fluctuations.

• • Fiscal Deficit

When two countries trade, if one of the countries has a serious deficit in its fiscal budget, the exchange rate of that country's currency will continue to decline.

• • Public Debt

The country will finance large deficits to build public projects. These activities can stimulate economic development in the United States to a certain extent, but if a country has a large amount of public debt, it will become less attractive to foreign investors.

A country's massive debt will lead to inflation and cause the inflation rate to rise.

• • Political stability

A foreign investor will look for a country with stable politics and good economic conditions as an investment target.

 

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Authoritative ranking of the world's top ten formal foreign exchange trading platforms

• • Macro
  • Jinrong China
  • FOREX
  • FXCM
  • FXPro
  • XM
  • oufu market
  • IC Markets
  • Oanda
  • ABL
  • Data source: ifeng.com Finance:https://finance.ifeng.com/c/8ezHa4i7WjT

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Forex trading related questions

• • How long does it take to learn Forex?

It takes about three months to go from getting started to mastering foreign exchange trading. This process includes becoming familiar with the basic knowledge of the foreign exchange market, understanding technical analysis and fundamental analysis, and mastering the skills of risk control and money management.

MT4EA is an automated trading software that can automatically execute transactions in products such as foreign exchange, gold and crude oil. It is suitable for investors with different investment cycles. Using this software not only requires certain professional knowledge, but also requires continuous practice and learning to improve one's trading skills.

During the learning process, investors need to focus on risk control and ensure the safety of funds. A sound money management strategy is essential to avoiding major losses. Additionally, developing a solid trading plan and developing discipline are key factors to success.

From getting started to mastering foreign exchange trading, it takes time, energy and accumulation of professional knowledge. Automated trading tools such as MT4EA can provide convenience for investors, but at the same time, they also require investors to continue learning and practicing to improve their trading level.

• • How to make money from foreign exchange trading?

Use leverage

Forex trading often offers high leverage, which means you can control larger trade sizes with a smaller capital. This can magnify profits, but it can also magnify losses.

Hedging

Reduce risk by buying and selling two related currency pairs or assets simultaneously. This strategy protects your investment when there is uncertainty about the direction of the market.

day trading

Day traders open and close positions within a day in an attempt to profit from short-term price fluctuations.

trend following

Identify the long-term trend of a currency pair and trade with it. If the trend is up, you can choose to go long; if the trend is down, you can choose to go short.

• • Are foreign exchange risks high?

market risk

The foreign exchange market is changing rapidly, and exchange rate fluctuations are affected by many factors, such as economic data, political events, etc., which are difficult to predict accurately, which brings uncertainty to transactions.

Leverage risk

Foreign exchange trading uses margin trading, and leverage magnifies returns, but it also magnifies risks. Under high leverage, a slight fluctuation may lead to large losses, so it is important to control positions.

Platform risk

The foreign exchange market is a mixed bag, and some irregular platforms have potential financial security risks. In addition, the platform’s transaction costs, deposit and withdrawal speed, etc. will also affect the trading experience. Choosing a formal platform is crucial.

psychological risk

Foreign exchange trading requires a good mentality. Emotions such as fear and greed will affect trading decisions, leading to wrong operations such as blindly opening positions or stopping losses. It is important to learn to control your emotions.

• • How to read the exchange rate buying and selling?

The buying and selling prices of exchange rates are distinguished by the different exchange rates used by banks when buying and selling foreign exchange. ‌

The buying price is the exchange rate used by banks when buying foreign exchange from peers or customers.

The selling price is the exchange rate used by banks when selling foreign exchange to peers or customers.

The difference between the two is usually between 1‰ and 5‰. This difference is the bank’s income from operating foreign exchange trading business.

• • Whose money is the foreign exchange deposit?

Foreign exchange reserves refer to the foreign exchange part of the international reserve assets held by a country's government, that is, the claims held by a country's government expressed in foreign currencies. They are assets held by a country's monetary authority and can be exchanged for foreign currencies at any time.

The main component of China's foreign exchange reserves is U.S. dollar assets, data released by the State Administration of Foreign Exchange.

Starting in April 2016, the People's Bank of China simultaneously released foreign exchange reserve data using the U.S. dollar and Special Drawing Rights (SDR) as reporting currencies.

• • How to make a difference in exchange rate?

Exchange difference refers to profit from general foreign exchange transactions. Through changes in foreign exchange rates and different buying and selling time points, profits are generated from price differences.

For example, assuming that the Taiwan dollar is trading at 1:3 against the Japanese yen, and the investor has NT$10,000 in hand, and expects that the yen will appreciate and the Taiwan dollar will depreciate in the future, then the NT$10,000 in hand can be exchanged for NT$30,000.

• • How much is one lot of foreign exchange?

In foreign exchange trading, generally a transaction is an integer, such as 1,000 currencies or 10,000 currencies.

Therefore, the lot size is a transaction of 1,000 currencies or 10,000 currencies.

• • How often are exchange rates updated?

The exchange rate changes 24 hours a day, and it also changes on weekends.

The exchange rate changes at any time during the trading day.

The number of changes in a day is not limited or fixed.

The inter-bank market is closed on non-trading days, and banks' quotations to customers are suspended or the price difference is large.

Therefore, the exchange rate changes every day, not every month, and more frequently.