The order of financial markets in western countries is stocks, Forex Spot Trading, and futures. Due to historical reasons, stocks, futures, and spot stocks followed in my country. The spot market in China began in 2000 and started to operate in 2001, and the actual participation of investors began from the low in 2003. It is an emerging sunrise industry.
Forex Spot Trading Advantage
- The Forex Spot Trading market has been developing in China for more than ten years. With the development of the social economy and increasing people’s income levels, investment and financial management are no longer exclusive of the rich.
- The public is gradually owning the concept of financial management. Bank savings have long been unable to meet the needs of modern people, and investment has naturally become the new favorite of everyday people.
- However, the unpredictable market conditions of financial instruments such as stocks, funds, and futures have discouraged many investors. As a product of the development of the times, spot trading presents itself in front of the world with a brand-new look with its advantages of low risk and high return.
- As a new thing, spot online trading has strong vitality and good development prospects and is making great strides forward. As people gradually understand and intervene, the online trading market will inevitably play a critical role in social and economic life.
What is Forex Spot Trading?
Spot electronic transactions are transactions that use the Internet as a tool and an e-commerce model. Buyers and sellers do not meet each other. Using the electronic trading market as the trading platform and the national government as the referee, centralized bidding and trading on the corresponding electronic platform through the computer network, Unified matching and settlement, agreeable settlement and payment, and real-time display of price quotations; it is a win-win model that combines online and offline, real and virtual, and traditional economy and network economy, which entirely solves spot commodity transactions. The residence source, customer source, online settlement, logistics and distribution, and many other complex transaction forms.
The functional role of the Forex Spot Trading
1: Investment function
Traditional spot trading is restricted by the region, the quality of goods, investors’ financial resources, and the professional level. There is almost no investment value in the spot electronic trading market for ordinary investors. Because the transactions are standardized electronic trading contracts, the goods Quality is guaranteed; electronic trading, without geographical restrictions; margin trading, with less investment, and ordinary investors can quickly intervene to obtain economic benefits.
2: Price discovery function
An open, fair, efficient, and competitive trading operation mechanism is formed with authenticity, anticipation, continuity, and authority in the spot electronic trading market. Traditional trading modes are subject to geographical restrictions, and the number of participating investors is often apparent. However, there are many investors involved through spot electronic transactions, including many commodity producers, sellers, and processors. Beverages, importers, exporters, etc., prices can represent the strength of both supply and demand and help form reality. At the same time, most of the investors participating in the transaction are familiar with the market of a particular commodity, have a wealth of business knowledge, extensive information channels, and a set of scientific analysis and forecasting methods, which reflect the trend of supply and demand changes.
3: The function of avoiding risks
Producers and operators can effectively avoid, transfer or diversify the risks of fluctuations in the spot market by conducting hedging operations on the spot electronic trading market. Hedging can help prevent risks because the basic economic principle is that the spot electronic transaction of a specific commodity and the spot will be affected and restricted by the same economic factors at the same time and space. Therefore, under normal circumstances, the two markets’ trend of change is the same.
What are the advantages of Forex Spot Trading?
Advantages of Forex Spot Trading:
1. Free access to the mechanism. A fund can be bought and sold n times in the same day.
2. Flexibility, high efficiency of capital use, and many profit opportunities. Unlike the T+1 mechanism of stocks, which can only be sold the next day, profit opportunities are often missed.
3. Two-way trading, either long or short. You can buy when the price is low and sell after the price rises; you can also sell when the price is high and then buy and buy after the price drops so that you can make profits in both directions. Unlike unilateral stock trading, you can only buy up, not down.
4. Strike big with small, four times wealth leverage.
5. Implement a 20% margin system; that is, you can buy and sell commodities worth 3,000 yuan with only 10 yuan, 30 times the capital leverage effect, and earn more profits.
6. Funds are safe and free to convert. Trading funds are in and out of “Bank-Commercial Link.” Traders can transfer in and out at any time in their trading order system with a password. This is fast and convenient, and a third party supervises the bank, and the funds are safe and transparent.
7. High investment value and generous returns. Price changes are active, with a daily fluctuation rate of about 30%, and price changes are regular, the market is easy to grasp, has universal benefits, and the rate of return is high. Under normal circumstances, the monthly return is 10%-30%.