What is forex?
Forex transactions generally refer to transactions in which one currency is converted into another at an agreed price. The foreign exchange market is the most liquid trading market in the world, with a daily trading volume of more than US $5400 billion. By contrast, the NYSE’s trading volume of listed securities is only $34.52 billion a day on average.
More than 85% of forex transactions are concentrated in major currency portfolios, including the euro, US dollar, Japanese yen, British pound, Swiss franc, Australian dollar and Canadian dollar. Market trading activity is the most active in London trading hours, with more than 38% of transactions taking place through the London foreign exchange market.
What is CFD
CFD is an investment behavior that the buyer and the seller conclude a transaction contract to calculate the difference between the opening value and closing value of a certain target financial product.
All leveraged trading products like CFD can help you use your investment funds more effectively. Please note, however, that leveraged trading may result in greater profits or losses on your investment than unlevered trading products.
The difference contract is a margin transaction. You only need to deposit part of the total value of the transaction product contract to carry out the transaction. Compared with the traditional cash transaction mode, you can more effectively use the limited funds to increase the investment potential. Your profit or loss depends on the price difference between the products you buy and the products you sell. The margin requirements for cemx contract transactions will vary depending on the product being traded.
- Transaction contract completed by the difference between the opening price and closing price of the target financial product
- A derivative financial product allows you to trade price changes of the underlying financial product without actually owning the financial product
- Total return swap refers to the purchase contract of borrowed funds from the counterparty to obtain the return of the target financial product. The borrowing cost can be paid separately through overnight interest, or it has been included in the price difference of the trading product
- For leveraged trading products, only part of the contract value (margin) is required as the initial margin
- Customers can establish long position or short position contracts
- It is an over-the-counter product. You can close your position through the counterparty
What is margin and leverage
Margin and leverage are the most critical factors in foreign exchange trading. You can directly apply to the platform for changes in the size of leverage. Simply speaking, leverage can make the total amount of trading larger than the total amount of capital investors initially invested. At the same time, investors need to deposit a margin.
At the same time, the margin is used as the deposit for account opening and the necessary fund for continuous transaction, not as expenses or transaction costs. It is used to set aside and allocate funds for your account from your deposit amount. The size of the margin is usually the percentage of your transaction amount (such as 2% or 5%), for example, if the margin ratio is 2%, the margin required for $1000000 transaction is $20000.
In general, this means that investors can control the amount of money that is 100 times or more than the actual investment value. At the same time, it also means that a potential trading problem will affect investors. The role of leverage will also enlarge losses, And when the market changes, the increase of loss will be very large. If you don’t have enough margin, you will not be able to cope with the risk. If you have no trading experience or lack of experience before, we strongly recommend that you consider the actual financial situation and choose a lower level of leverage.
Please note that the function of forex margin and CFD leverage is to enlarge your profit and loss. The leverage in foreign exchange trading may not be suitable for all investors. Please invest carefully.
What is swap
- Overnight interest refers to the interest earned or paid when a position is held for more than the closing time. It reflects the interest difference between two currencies of a currency pair
- Cemx does not participate in the physical delivery of transactions, so all orders are moved to the second trading day at the end of the trading day, which will generate overnight interest
- Key factors of overnight interest
- Overnight interest will be charged when the position is closed for more than the next day
- The time of overnight interest collection is 00:00 a.m. the next day of platform time
- Overnight interest is the interest earned or paid by a position overnight. It reflects the interest difference between two currencies of a currency pair
- Overnight interest will be calculated at midnight on each trading day, but due to the market closed on weekends, the overnight interest on Wednesday is three times the normal rate
- Each base currency has its own overnight interest calculation and is based on a standard hand contract