Of course, if you want to operate better in the foreign exchange market, you need to understand some foreign exchange knowledge you need to know in this market, because you can only create so-called transactions on this basis if you know the relevant knowledge and regulations of the foreign exchange market system. So, how is it better to operate foreign exchange speculation? Follow the author today to learn more about it!
How to operate better in foreign exchange speculation? First of all, everyone must understand that any transaction in the foreign exchange market is mainly composed of two parts, one is buying, and the other is selling. To buy is to buy a certain currency, and to sell is to sell that currency. Of course, in the foreign exchange market, buying is called “opening position”, and selling is called “closing position”.
Assumption: According to the instructions of the trading system, the trader predicts that the Swiss franc will depreciate against the US dollar. When the USDCHF exchange rate reached 1.7860, according to the instructions of the trading system, it was time for him to buy.
The exchange rate of the Swiss franc reaches this price, and there is 1,000 U.S. dollars in the trader’s margin account. He can buy the U.S. dollar with a trading unit of 100,000 by using a leverage ratio of 1:100 (because the U.S. dollar is the basis for the price of this currency pair. currency).
A trader buys the trading unit, that is, a position is established. In this way, we bought $100,000 when USDCHF was trading at 1.7860.
In this case there are two parties, the trader and the broker. The trader is obliged to allocate CHF 178600 to the broker when performing part of the transaction. At the same time, the broker assumes the obligation to allocate USD 100,000 to the trader. It should be pointed out here that it is very important – at this time, the appropriation of funds has not been realized, and they only undertake their own obligations. Figuratively speaking, they have completed the transaction, but agreed to allocate funds to each other later.
Suppose the dollar appreciates a bit against the Swiss franc over time. In other words, the exchange rate of USDCHF will reach 1.7861. Traders liquidate their positions. A trader should take the opposite trade when closing out a previously opened position.
A trader buys $100,000 from a broker. Now he wants to sell these dollars at the current exchange rate, which is 1.7861. That is, the obligation is now reversed – the trader is obliged to provide $100,000 to the broker.
The broker correspondingly provided 178,610 Swiss francs to the trader according to the listed price. At this time, the appropriation of funds has not yet been realized, but only the mutual settlement of obligations.
How is it better to operate foreign exchange speculation? I believe that everyone has understood through examples. The author just hopes that everyone can see the essence of the process through examples and summarize some things by themselves, so that the effect that the author expects will be achieved. That is to say, the author Just to guide everyone, it is investors who can really create.
