What does foreign exchange law mean? Analysis of practical skills of foreign exchange trading

The foreign exchange transaction method is a management method used by enterprises in foreign exchange market transactions. The function is that enterprises hope that this management method can reduce or avoid risks when conducting foreign exchange transactions. Many novice investors do not know what the foreign exchange trading law is, and do not know whether it is legal to speculate on foreign exchange on the mt4 platform. This article will explain these two issues to you.

​​

What is the foreign exchange transaction law?

​​

The foreign exchange transaction method refers to the risk management method for enterprises to reduce or eliminate foreign exchange risks through foreign exchange transactions.

​​

The foreign exchange transaction law includes the following aspects:

​​

Spot foreign exchange transaction law

​​

By conducting spot foreign exchange transactions in the same amount and opposite direction as the existing open position (the part of assets or liabilities exposed to foreign exchange risk due to the difference between foreign exchange assets and liabilities), the exchange rate fluctuations within two days can be eliminated. losses to come. Spot foreign exchange trading can not only meet the buyer's temporary payment needs, but also help buyers and sellers adjust the currency ratio of foreign exchange positions to avoid foreign exchange exchange rate risks. Since spot foreign exchange transactions only fix the exchange rate for delivery on the third day in advance, its hedging effect is very limited.

​​

forward contract law

​​

Forward contract law is a method of using forward contracts to prevent foreign exchange risks. It is more widely used to prevent foreign exchange risk than the spot foreign exchange trading method. It means that importers and exporters sign forward foreign exchange sales contracts with banks to fix the exchange rate and avoid the risk of exchange rate fluctuations.

​​

Currency Futures Contract Law

​​

Currency futures contract law refers to the method of signing currency futures contracts with banks, futures companies and other institutions to prevent foreign exchange risks.

​​

Option Trading Law

​​

Option trading law refers to a method in which both parties to a transaction enter into a forward foreign exchange contract with the option to perform or not perform according to the agreed exchange rate and pay a certain fee to prevent foreign exchange risks.

​​

Swap Transaction Law

​​

Swap transactions are a common transaction in foreign exchange business. It is a way for buyers and sellers to conduct spot foreign exchange transactions and forward foreign exchange transactions of the same amount at the same time. The main features of swap transactions are: buying and selling are carried out at the same time, the amount of currency buying and selling is the same, but the term structure of the transaction is different. For example, a bank in New York bought a spot of 10 million yen from a bank in Tokyo due to business needs. foreign exchange, but at the same time sold 10 million yen of forward foreign exchange to the Bank of Tokyo for delivery in 3 months.

​​

In addition, it should be noted that the economic fundamentals of various countries are mainly reflected by various economic data. Therefore, understanding some knowledge of economic data and mastering the method of judging whether the data is good or bad is the first step in foreign exchange trading. The technical analysis of foreign exchange trading method refers to the sum of the methods of taking market behavior as the research object, judging the market trend and following the cyclical changes of the trend to make stock and all financial derivatives trading decisions.

​​

Analysis of practical skills of foreign exchange trading

​​

To properly adjust the trading method. If the major currency pairs that are usually traded have flat fluctuations for a certain period of time, you can try to find other currency pairs that have shown the volatility you expect, or simply look for other markets.

​​

Put your energy into "scalping hours". Scalping trades are usually short-lived and considered one of the quickest ways to make money. Despite the short duration of the trades, traders spend a lot of time doing chart analysis to identify many different trade setups. Therefore, scalping requires more effort than a long-term trading strategy.

​​

Indicators should not be too many. Many traders always try to add too many indicators to their strategies, but end up losing good trading opportunities due to conflicting information.

​​

Find a trading strategy that works for you. A method-oriented trader favors strategies based on analysis and calculations; an emotionally volatile trader is not suited to high-pressure scalping strategies that require quick decision-making.

​​

Now everyone should have some understanding of the foreign exchange trading laws. These trading laws are all to regulate the foreign exchange market. For investors, it is not only necessary to be familiar with these foreign exchange trading laws, but also to be flexible in their use. As for the skills of foreign exchange trading, you can refer to these mentioned above.