In recent years, the domestic and international foreign exchange markets have seen significant annual growth rates, with foreign exchange brokers, practitioners, market size, and investor numbers experiencing explosive growth. Many investors, burdened with the task of making money, have felt a “spring in their step” towards foreign exchange, but have also found it too mysterious and somewhat inscrutable. The following 4E editorial will unveil the mysterious veil of foreign exchange.
Foreign exchange, what is it?
Firstly, let’s understand what foreign exchange is. Foreign exchange mainly refers to foreign currencies, including payment methods used for international settlements represented in foreign currencies. These currency transactions generate rates, known as exchange rates, which are the exchange ratios between different currencies. Exchange rates are determined by the supply and demand relationship in the foreign exchange market, but government intervention is also possible. Exchange rates in the foreign exchange market are constantly changing in real time, as currencies are exchanged between different countries, causing prices to fluctuate. This volatility provides investors with the opportunity to profit from the price difference.
The history of foreign exchange development
The history of the foreign exchange market is ancient and complex. It originated in the Middle East as a means to make third-party settlement more efficient. International banks emerged historically to meet the trading needs of non-domestic people and institutions. Subsequently, the foreign exchange market underwent various periods such as the gold standard, gold exchange standard, Bretton Woods system, Smithsonian Agreement, and Jamaica Agreement. In the 1980s, with the development of computers and related technologies, the flow of cross-border capital accelerated, connecting markets in different continents into one whole.
Today, the foreign exchange market has become one of the most liquid financial markets in the world. Its daily trading volume has rapidly increased from approximately $70 billion in the mid-1980s to the current $5.1 trillion, which is four times the global GDP, 12 times larger than the futures market, 27 times larger than the stock market, and 53 times larger than the trading volume of the New York Stock Exchange. The main participants in the foreign exchange market include central banks, foreign exchange banks, foreign exchange brokers, as well as individual and corporate traders.
The essence of making money in foreign exchange
The essence of making money in foreign exchange lies in profiting from the fluctuations in exchange rates. Exchange rates in the foreign exchange market are constantly changing in real time, with exchange rates between different countries’ currencies fluctuating continuously. Investors can profit by buying a currency at the right time and selling it when the exchange rate rises, or selling it when the rate falls and then buying it back. This difference trading is at the core of the foreign exchange market, allowing investors to earn profits from the market itself. The foreign exchange market has a huge daily trading volume, with the global foreign exchange market having a daily trading volume of up to $6 trillion, with various participants trading, including individual investors, central banks, and institutions, providing investors with abundant opportunities, but also accompanying certain risks that require cautious and wise decision-making.
Comparison of foreign exchange with other investment products
Compared to other investment products, foreign exchange has some obvious advantages that make it an increasingly popular choice for investors:
Low trading costs: Foreign exchange trading has relatively low costs compared to stamp duty, high commissions, or intermediaries.
Equal profit opportunities in rising and falling markets: The foreign exchange market allows investors to buy and sell when the price of a currency pair rises or falls, providing opportunities for profit as long as the trend is correctly predicted.
24-hour global trading: The foreign exchange market trades 24 hours a day, meaning investors can find opportunities in markets across different time zones.
High leverage: Foreign exchange trading offers high leverage ratios, allowing investors to participate in larger trades with less capital.
Market transparency: The foreign exchange market is a fair and transparent market without market makers, even central banks cannot manipulate prices.
Low entry barrier: Compared to trading stocks, futures, and options, the entry barrier for foreign exchange trading is lower, with some platforms offering mini and micro accounts with low minimum investment amounts. For example, the 4E foreign exchange platform allows trading with just $2-3.
How can the average person start trading foreign exchange?
For the average person looking to start trading foreign exchange, here are some basic steps and suggestions:
Step one: Master the basics of foreign exchange trading: Before starting trading, learn the basics of the foreign exchange market, including currency pairs, trading hours, market participants, etc.
Step two: Understand how fundamental news affects foreign exchange trends: The foreign exchange market is influenced by global economic events and political news, understanding how these factors impact the market is crucial.
Step three: Learn technical analysis: Study and understand how to use various technical indicators, which will help you better analyze market trends and price dynamics.
Step four: Choose an excellent, regulated foreign exchange trading platform: Ensure that you choose a regulated foreign exchange platform to ensure the safety of your funds.
Step five: Start with small deposits and feel the market: Begin trading with small funds to gain experience and feel the market’s fluctuations.
Step six: Gradually get the hang of it: With accumulated experience, gradually increase the trading volume and develop your trading strategy.
In conclusion, investing in foreign exchange is a potentially lucrative field that can provide substantial returns, but it also comes with certain risks. Understanding the market, continuous learning, and cautious trading are key to success. More and more people are getting into foreign exchange trading because of the market’s attractiveness and opportunities, but everyone in the foreign exchange market needs to make prudent and wise decisions.
As a trading platform, 4E Foreign Exchange supports leverage of up to 1000 times for long/short trades, with a single lot size of 0.01-20 lots, and a minimum trading amount of just $3, offering the lowest spreads online. The platform actively promotes compliance worldwide, currently holding financial licenses in multiple countries, and has become a global partner of the Argentine national team, ensuring the platform’s safe and stable operation, with full protection of customer rights.
Currently, 4E is hosting the “Crazy Thursday” event, aiming to provide investors with a lower fee and higher return environment. During the event, trading any derivative products such as foreign exchange, commodities, or stock indices on Thursdays, as long as your trading volume increases by at least 50% compared to the average volume of the previous three days, you can receive a high spread rebate. No complex calculations or additional operations are needed, as long as your trading volume meets the requirements, the reward will be automatically credited to your account on Friday.
