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Getting forex investment

Foreign exchange is a payment certificate expressed in foreign currency for international settlement. The International Monetary Fund (IMF)'s interpretation of foreign exchange is: foreign exchange is held by the monetary administration (central bank, monetary institution, foreign exchange leveling fund, and Ministry of Finance) in the form of bank deposits, Treasury bills from the Ministry of Finance, and long-term and short-term government securities. Claims that can be used in the balance of payments deficit include foreign currencies, foreign currency deposits, foreign currency securities , foreign currency payment vouchers.

Exchange rate, also known as exchange rate, foreign exchange rate or foreign exchange market, is the ratio of one country's currency to another country's currency, that is, the purchase and sale price of foreign exchange. This is the basic concept of foreign exchange investment. Currency pairs refer to the two currencies that make up the exchange rate. Among them, the former currency is the base currency, and the latter currency is the denominated currency or relative currency. For example, the exchange rate of the currency pair Euro/USD (EUR/USD) is 1.1553, which means 1 euro can be exchanged for 1.1553 US dollars.    


There are two ways to mark foreign exchange rates: the direct price method and the indirect price method. The direct price method, also known as the payable price method, refers to the calculation of how many units of domestic currency are payable based on a certain unit of foreign currency. At present, most countries in the world have adopted the direct price method. For example, the Japanese yen, Swiss franc, Canadian dollar, etc. are all direct pricing methods. For the Japanese yen, the exchange rate of USD/JPY is 113.25, which means that if you want to get 1 US dollar, you must pay 113.25 yen. The indirect pricing method, also known as the receivable pricing method, refers to the calculation of several units of foreign currency receivable based on a certain unit of national currency. The indirect pricing method is adopted for the euro, pound sterling, and Australian dollar.

Straight and cross, understanding these two concepts is also the foundation of foreign exchange investment. Straight refers to transactions that include USD currency pairs, for example: GBP/USD, USD/JPY, EUR/USD. The combination of direct quotation is a currency combination that is directly exchanged with the US dollar. As long as there is a US dollar transaction in the currency pair, it is a direct quotation method. Cross-crossing refers to transactions between two non-US currencies, such as: EUR/JPY, GBP/JPY, EUR/GBP.

In order to express the exchange rate more conveniently and accurately, it is customary to define the minimum change unit of the exchange rate change for the entry of foreign exchange investment as a point. For example, the minimum change unit of the US dollar/Japanese yen (USD/JPY) is 0.01, then this is 1 point of the exchange rate of the currency pair; and the minimum change unit of the EUR/USD (EUR/USD) is 0.0001 (that is, 1 point), then If the currency pair changes by 0.01, it means that the exchange rate has changed by 100 points. The difference between the purchase price and the selling price is the spread. Banks or foreign exchange brokers make profits through this spread. Generally speaking, major currency pairs trade more frequently, and their trading spreads are smaller than those of secondary currency pairs.

Conducting simulated trading is a verification of what you have learned, and it is also an entry way for foreign exchange investment transactions. Before you have the ability to trade, entering a field transaction will definitely pay a huge price, so doing a few more simulated transactions can reduce and buffer this painful process. Strictly speaking, a simulated transaction is a talk on paper, and it can also be called an internship stage. It cannot give you the unforgettable experience and feeling like a real transaction.

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