There are two main ways for domestic investors to speculate on foreign exchange, one is through banks to do real foreign exchange trading, the other is through foreign exchange retailers to do foreign exchange margin trading.
Most foreign exchange investors may wonder which is better: real exchange or margin trading.
In fact, compare the advantages and disadvantages of the two, choose the most suitable for their own is the most important.
Here, we will look at two trading methods: firm foreign exchange and foreign exchange margin.
Real foreign exchange trading is mainly provided by domestic banks, and foreign exchange trading is conducted according to the daily foreign exchange rate provided by the bank to obtain the difference value.
There is no leverage in real foreign exchange trading, because large financial leverage is not allowed in China at present, and its biggest advantage is relatively small risk. The disadvantages of real foreign exchange trading are very obvious. Without leverage, investors need to prepare a large amount of capital for investment in order to increase returns.
Profit opportunities are also relatively low.
Foreign exchange margin trading is different.
Foreign exchange margin trading is mainly provided by foreign exchange retailers, whose most significant advantage is the leverage model. The maximum leverage of foreign exchange margin trading is 400 times.
The disadvantage of foreign exchange margin is that the risk is relatively high and the requirement of investors’ foreign exchange trading knowledge is relatively high.
The advantage of foreign exchange margin trading is that it requires a small amount of capital. With the amplification of leverage, large amounts of capital can be controlled for trading.
The exchange rate of foreign exchange margin is all in accordance with the real fluctuations of the market, the fluctuations are relatively large, and there are many profit opportunities. In addition, foreign exchange margin has a series of advantages such as 24-hour trading, two-way profit and T+0 mode.
From the above, it is not difficult to see that different investors are suitable for different trading patterns.
If the investor funds are very large, and risk averse, the main purpose is to preserve value, it can be a solid trade.
Foreign exchange margin trading is recommended if investors are willing to take risks and want to make large profits.
Foreign exchange transactions of commercial banks are mainly provided by domestic banks. Foreign exchange transactions are carried out according to the daily foreign exchange quotation provided by the banks in order to obtain the difference.
Foreign exchange firm trading is not leveraged, because China does not have big financial leverage at present, its biggest advantage is relatively small risk.
The drawbacks of trading by foreign exchange companies are clear.
Because there is no leverage, investors need to prepare large amounts of money to invest in order to increase profits.
In addition, foreign exchange companies’ exchange rates are provided by domestic banks, which will have relatively small fluctuations and relatively low profit opportunities.
Foreign exchange margin trading is different.
The most significant advantage of forex margin trading, which is mainly offered by forex retailers, is the leverage model, which can open up to 400 times of leverage for forex margin trading.
The disadvantages of foreign currency margin are the relatively high risk and the requirement for the investor’s knowledge of foreign exchange trading.
The advantage of foreign exchange margin trading is that less capital is required.
As leverage increases, smaller funds can control larger funds.
The exchange rate of the foreign exchange margin is fully in line with the real fluctuations of the market. The fluctuations are relatively large and there are many profit opportunities.
In addition, foreign exchange margin has a series of advantages such as 24-hour trading, two-way profit and T+0 mode.
It is not difficult to see from the above that different investors have different trading patterns.
If the investor is very large, risk-averse and the main objective is to preserve value, a firm trade can be made.
If investors can take risks and want to get high profits, it is recommended to trade foreign exchange margin.
