Jayden Forex trading spot trading also refers to live trading. Spot forex trading refers to foreign exchange transactions within the second business day after the transaction for delivery of foreign exchange trading business. forex spot trading is the most common form of forex trading.
For the forex exchange market participants spot trading is the most important, it is the basis of all forex exchange transactions.
Spot forex trading is a transaction between large banks, and between large banks acting on behalf of large clients, where the sale and purchase agreement is concluded and the funds are received and settled within two business days at the latest.
The practice of settling spot forex trading within two business days of the transaction has become a habit now.
The reason for its formation is that in the past, the spot forex trading between Europe and the United States was founded by wire transfers of telegraph companies, and the transactions were generally during the peak hours of telegraph companies and the telegraph is very expensive. So it is customary to leave until the next morning to avoid the busy hours of telegraph business to get telegraph company preferential rates for overnight business and reduce costs.
Although the forex market has been established through the computer network between the banks clearing system now, it can do the same day trading and the same day delivery, but the two business day system is still inherited.
Spot forex trading is the most basic forex exchange transaction, the basic role is, to meet the temporary payment needs, achieve the transfer of currency purchasing power; adjust a variety of currency positions to avoid forex exchange risks; forex exchange speculation, and so on.
Outward remittance and inward remittance are the most simple and basic ways of spot forex trading and can be used for all purposes, such as forex trade settlement, forex capital investment, forex exchange speculation, etc..
Because the specific method of inter-bank remittance operation is different, these two types of remittances can be divided into wire transfer, letter transfer and ticket transfer, etc.
Spot forex trading can also be adjusted to a variety of currency positions to avoid forex exchange risk.
For example, a country’s foreign exchange reserves, generally the US dollar for a large proportion. In order to prevent losses caused by the fall of the US dollar exchange rate, part of the US dollar can be sold on the spot trading market and buy other currencies with an upward trend in exchange rates, such as the Japanese yen, Germany Mark etc.
Foreign exchange speculation business is a kind of exchange rate change in the future according to the forecast, use spot forex trading for forex exchange speculation, in order to earn the exchange rate difference between the profit and the forex exchange trading.
The use of spot forex trading to carry out forex exchange speculation needs to have a sufficient capital base.
For example, a forex exchange speculator is expected to pound against the dollar exchange rate is likely to further appreciation, immediately buy a certain number of pounds of U.S. dollars spot, wait for the exchange rate of pounds to rise to a certain extent, and then sell the pounds held the spot, so that you can earn speculative profits due to the appreciation of the pound.
Similarly, if the forecast pound against the dollar exchange rate is predicted to further depreciation, the speculator will immediately sell the pounds held of pounds, buy dollars to stay until the exchange rate of pounds falls to a certain extent, and then immediately sell the dollars, buy pounds to hold, so that you can earn speculative profits due to the depreciation of the pound.
In spot speculative trading, the key is to accurately judge the exchange rate trend to decide whether to buy or sell.
However, prediction of exchange rate movements has become increasingly difficult due to the development of speculative trading. Although there are many methods and models, none of them is absolutely accurate.
As the investor must hold a full amount of forex currency to be sold in order to trade (the international popular forex trading margin trading lacks the short-selling mechanism and financing leverage mechanism of margin trading), therefore, it is also called live trading.
