Foreign exchange

The reason why the foreign exchange market is favored by more and more people and has become the preferred investment of international investors is closely related to the characteristics of the foreign exchange market itself. The main characteristics of the foreign exchange market are:

There is a city but no show

The financial industry in western industrial countries basically has two systems, namely, a central operation for centralized trading and a business network without a unified fixed location. Stock trading is bought and sold through an exchange. For example, the New York Stock Exchange, the London Stock Exchange, and the Tokyo Stock Exchange are the main trading venues for stocks in the United States, New Zealand, and Japan. The quotations, trading hours and settlement procedures of centralized financial products have unified regulations. And established the industry association, formulated the industry code. Investors use brokerage companies to buy and sell required commodities. This is "there is a market and a market." Foreign exchange trading is carried out through a network of merchants that does not have a unified operating market. It is not like stock trading with a centralized location. However, the network of foreign exchange transactions is global, and an unorganized organization is formed. The market is connected by an agreed method and advanced information system. Traders do not have membership in any organization, but must obtain the same The trust and recognition of the industry. This kind of foreign exchange trading market without a unified venue is called "there is no market." The global foreign exchange market averages trillions of dollars in transactions every day. Such a huge amount of funds is cleared and transferred in this kind of neither centralized place nor control of the central clearing system, and without government supervision.

Circular operation

Due to the different geographic locations of the global financial centers, the Asian, European, and American markets have become a global foreign exchange market that operates continuously 24 hours a day due to time differences. The New York market opens at 8:30 in the morning (based on New York time), the Chicago market opens at 9:30, San Francisco opens at 10:30, Sydney opens at 18:30, Tokyo opens at 19:30, and Hong Kong opens at 20:30. Singapore opens, Frankfurt opens at 2:30 in the morning, and the London market opens at 3:30. With such a 24-hour operation, the foreign exchange market has become a day and night market. The foreign exchange market will be closed only on Saturdays, Sundays and major holidays in various countries. This continuous operation provides investors with an ideal investment place without time and space barriers. Investors can find the best time to trade. For example, if an investor buys yen in the New York market in the morning, the yen rises after the Hong Kong market opens in the evening, and the investor sells in the Hong Kong market, he can participate in any market, anytime, regardless of where he is. Sale. Therefore, the foreign exchange market can be said to be a market without time and space barriers.

Zero Sum Game

In the stock market, if a certain stock or the entire stock market rises or falls, the value of a certain stock or the entire stock market also rises or falls. For example, the stock price of Nippon Steel in Japan has risen from 800 yen It fell to 400 yen, so the value of all Nippon Steel shares has also been reduced by half. However, in the foreign exchange market, the change in the amount of value represented by the fluctuation of the exchange rate is completely different from the change in the value of the stock. This is because the exchange rate refers to the exchange rate of the two currencies, and the change in the exchange rate is also a decrease in the value of a currency. An increase in the value of another currency. For example, 25 years ago, 1 U.S. dollar was exchanged for 360 yen. At present, 1 U.S. dollar was exchanged for 118 yen. This shows that the value of Japanese yen has risen while the value of U.S. dollar has fallen. In terms of total value, it changes from time to time without increasing value , It will not reduce the value. Therefore, some people describe foreign exchange trading as a "zero-sum game", more precisely the transfer of wealth. In recent years, more and more funds have been invested in the foreign exchange market, and the volatility of exchange rates has increased. The scale and speed of wealth transfer have become larger and faster. Calculated by the daily trading volume of US$2 trillion in global foreign exchange, A rise or fall of 1% means that 150 billion of funds have to be replaced by new owners. Despite the great changes in foreign exchange rates, any currency will not become waste paper. Even if a currency continues to fall, it will always represent a certain value unless the abolition of that currency is announced.