Foreign Exchange Trading and Practice--Margin Trading

Foreign Exchange Trading and Practice – Foreign Exchange Margin Trading
1. What is foreign exchange margin trading?
Also known as foreign exchange margin trading, it is a foreign exchange transaction conducted using the principle of leveraged investment, and it is a way of forward foreign exchange trading. The general margin ratio is 1%-10%, and you can use less amount to operate and hold more positions.
2. The application of margin trading
1. In terms of investment funds,
simply speaking, it is to pay a certain percentage of margin. Compared with firm offer trading, you can operate more foreign exchange positions. The risk of trading is the same, but the amount of funds invested is different, and the amount of profit and loss is the same.
2. Interest income
Investors can obtain interest income during the investment process (only high-interest foreign exchange has this part of the income, and it only has to be bought, but it is not available for selling, and the selling has to pay interest), regardless of the actual transaction It is still a margin transaction, and the interest income is calculated according to the contract amount. Although high-interest foreign exchange has interest income, the profit and loss of exchange rate changes in foreign exchange transactions is still the main factor. If there is a loss, the interest income may not be able to make up for the loss.
Calculation formula of interest:
interest calculation formula of Japanese yen and Swiss franc:
contract amount * (1/market entry price) interest rate (number of days/360) number of contracts
interest calculation formula of euro and British pound:
contract amount entry price interest rate (number of days/360) ) Number of contracts
3. Margin trading method to buy spot foreign exchange
1) Buy low and sell high
1] First consider the exchange rate
factor
.
Interest is divided into long-term and short-term transactions. If it is spot and 1-2 trading days, the impact of interest on profit and loss is small and can be ignored. However, if it is medium or long-term, the impact of interest on income must be considered.
3) Handling fee expenses
Handling fee is a fixed factor that affects income
4) Calculation formula of profit and loss The profit and
loss calculation formula of Japanese Yen and Swiss Franc is:
contract finance (1/selling price-1/buying price) number of contracts contract amount- Handling fee (+/-) interest The profit
and loss calculation formula for Euro and British pound is:
contract finance * (selling price - buying price) number of contracts contract amount - handling fee (+/-) interest
3. Features of foreign exchange margin trading
1 .The foreign exchange margin trading market is invisible and not fixed, and it is conducted directly between customers and banks without intermediaries such as exchanges.
2. With no expiration date, traders can hold positions indefinitely.
3. The scale is huge and there are many participants.
4. There are many currencies
. 5. The trading time is 24 hours without interruption
.