A guide to mastering the 4e foreign exchange market
With the booming development of the cryptocurrency asset market, the diversity of trading platforms has increasingly attracted users' attention. Against this backdrop, the 4e exchange has emerged as the world's first platform to support trading in various financial assets, including cryptocurrency, contracts, U.S. stocks, foreign exchange, and commodities.It is well known that the 4e exchange has a place in the cryptocurrency contract market due to its "low slippage, high depth," advantageous market depth, a matching engine capable of handling up to 1 million orders per second, and high-speed order processing capabilities, providing users with a trading environment that minimizes slippage. In fact, 4e's development in the foreign exchange market is equally impressive, so let's explore the unique aspects of the 4e foreign exchange market.
What are the unique aspects of foreign exchange trading?
Low Trading Costs
The trading volume in the foreign exchange market is extremely high, with daily transactions exceeding $5 trillion. The large number of trades makes it easy to find buyers and sellers for each currency pair, which helps keep retail traders' trading costs at ultra-low levels. Additionally, foreign exchange trading typically does not require commission payments, and the spread fees are also very low.
High Leverage
Foreign exchange leverage is similar to buying a house or apartment; you can establish a large position with a small initial deposit. The 4e platform supports up to 400 times leverage, meaning you can establish a position worth $40,000 with just a $10 deposit if you wish to.
The advantage of such operations is that if leverage is managed properly, a slight 0.1% movement in the currency pair can yield a 40% profit. However, the downside of using leverage is that when your trades incur losses, it can multiply your losses.
Low Manipulation Risk
Due to the vast size of the foreign exchange market, the risk of manipulation is much lower than that of the stock market.
Open Trading Hours
Foreign exchange trading is open 24/7, allowing people to trade at any time and on any day of the week. As a result, some traders have developed unique strategies targeting the Asian, European, and American trading sessions.
Fewer Markets to Monitor
Trading in the foreign exchange market means you only need to focus on a few countries: the United States, Canada, the European Union, the United Kingdom, and Japan. Of course, if you wish, you can also include Switzerland, Turkey, Sweden, Norway, and Mexico. However, most traders only focus on the major countries.
Foreign exchange trading is closely related to macroeconomic trends
The trading objective in the foreign exchange market is the exchange of currencies between countries, rather than the performance of specific companies. This makes foreign exchange trading closely related to macroeconomic trends, making it more suitable for tracking international economic conditions.
Of course, foreign exchange trading is not limited to those interested in economics and politics. On the contrary, most people trade foreign exchange using technical analysis, which involves studying historical price patterns.
What is the spread in foreign exchange trading?
In the previous section, we mentioned "spread fees" under "Low Trading Costs." So, what is the spread in foreign exchange trading?
The spread, also known as the "bid-ask spread," refers to the difference between the buying price and the selling price in foreign exchange trading. It represents the profit for the trader and reflects the liquidity and supply-demand relationship in the foreign exchange market. In simple terms, the spread is the fee charged for executing a trade, and its size is influenced by factors such as "liquidity, currency pairs, market time, economic data releases, political events, and market sentiment."
There are two main types of foreign exchange spreads: fixed spreads and floating spreads.
Fixed Spread: A fixed spread means that the bid-ask spread remains unchanged regardless of market conditions. This may be easier for beginners to understand, but it can lead to execution issues during periods of high market volatility.
Floating Spread: A floating spread changes with market fluctuations. During stable market conditions, floating spreads are usually lower, but they may widen during periods of high volatility.
Floating spreads are the most common and popular type of spread today. This type of spread is always very close to the original market spread, and the counterparties are real market participants rather than the brokers themselves.
In this 24-hour open foreign exchange market, there are three main trading sessions. The first is the London market, followed by the Americas market represented by New York, and finally the Asian market represented by Tokyo.
The trading sessions vary according to time zones from west to east. In summary: the London trading session is from 16:00 to 01:00 (GMT+8), the U.S. session is from 21:00 to 04:00 (GMT+8), and the Asian session is from 08:00 to 17:00 (GMT+8).
The overlapping trading hours between London and the U.S. (approximately 20:00 to 00:00 in GMT+8) are considered the most liquid period of the day.
How should foreign exchange beginners choose currency pairs?
First, beginners need to understand the major currency pairs, which will help you better grasp the market. Common currency pairs include Euro/USD (EURUSD), Pound/USD (GBPUSD), Australian Dollar/USD (AUDUSD), USD/Swiss Franc (USDCHF), USD/Yen (USDJPY), and USD/Canadian Dollar (USDCAD).
For beginners, it is recommended to start trading with the Euro/USD (EURUSD) currency pair. This is because the U.S. dollar and the Euro are the two most widely circulated currencies globally, and their relationship is close, with significant price fluctuations influenced by fundamentals, making it easier to predict trends, suitable for novice traders.
The trading volume of the Euro is second only to that of the U.S. dollar, so the Euro holds an important position in the U.S. dollar index, with relatively clear trend patterns. When the U.S. dollar strengthens, it usually means the Euro weakens; conversely, a strengthening Euro indicates a weakening U.S. dollar.
Another common currency pair is Pound/Yen (GBPJPY), which has significant price volatility and is known as the "king of volatility" in the foreign exchange market. However, due to its high volatility, it is not recommended for beginners to immediately engage in this currency pair, as it may be challenging for novices to grasp its volatility characteristics.
The Pound is a high-yield currency, while the Yen has maintained low-interest rates, allowing investors to take advantage of the interest rate differential between the two countries for carry trades, which is also a focal point for investors. Additionally, the Yen is often regarded as one of the safe-haven currencies.
Among safe-haven currencies, the Yen is highly sought after by investors, while the Pound and Yen often exhibit inverse volatility. When market sentiment leans towards risk aversion, safe-haven currencies are favored, while high-yield currencies may face pressure. Conversely, when market sentiment leans towards risk, high-yield currencies may be in demand, while low-yield currencies may decline, leading to significant fluctuations in the Pound/Yen.
For investors with some foreign exchange trading experience, sufficient funds, and a willingness to take risks, major currencies like the Pound, Euro, and Swiss Franc may be more suitable, as these currencies exhibit greater volatility, aligning with a more aggressive trading style.
On the other hand, if you have a lower risk tolerance and prefer long-term trading, you might consider investing in some high-yield currencies like the Australian Dollar and Canadian Dollar.
4e foreign exchange market supports 400 times leverage for long and short trading
As a leading global financial asset trading platform, 4e provides investors with foreign exchange, U.S. stocks, commodities, cryptocurrency, and contract trading services. Particularly in foreign exchange trading, 4e offers eight of the most traded currencies internationally, including the U.S. dollar, Euro, Pound, Yen, Australian Dollar, New Zealand Dollar, Canadian Dollar, and Swiss Franc, totaling 12 trading pairs, supporting 400 times leverage for long and short trading, attracting a large number of users with extremely low spreads.
(4e Foreign Exchange Floating Margin Contract Details)
4e Foreign Exchange Trading Tutorial
- Choose a trading pair. Click on the "Trading" option at the bottom of the 4e APP and select the "Foreign Exchange" trading pair.
- Place an order. Choose "Buy" or "Sell," market price or limit price, and enter the number of lots to place an order.
Market Price: Execute quickly at the latest market price;
Limit Price: Enter your expected price, and when the market reaches that price, it will execute the trade.
Then verify the order again and click "Confirm."
- Check the order. After successfully placing an order, you can view the opening price, margin, number of lots, overnight interest, account status, and margin ratio in the position section at the bottom of the APP. When your profit reaches your expectations, you can click "Close Position."
Conclusion
As one of the largest and most liquid financial markets in the world, the foreign exchange market holds many potential opportunities. Although foreign exchange trading has many advantages, investors should also be aware that the foreign exchange market comes with risks. The uncertainty of exchange rate fluctuations, potential losses from leverage, and the impact of global events on the market all require careful consideration by investors.
Therefore, in this vibrant and opportunity-filled market, choosing a reliable trading platform is crucial. As a professional financial asset trading platform, 4e provides investors with a wide range of investment options, opening the door to diversified investments from foreign exchange, U.S. stocks, cryptocurrency to contracts. Especially in the field of foreign exchange trading, the 4e trading platform creates opportunities for investors to explore the foreign exchange market with its unique advantages.
Moreover, 4e is committed to providing investors with high-quality trading assets and services and has established a good reputation and credibility in the market. However, regardless of which trading platform you choose, investors need to remain cautious, fully understand market risks, and take appropriate risk management measures.
