Summary:
Understand the distinctions between forex margin trading and spot trading for smarter decisions in the forex market.
Forex margin trading and forex brokers service are currently the two most common forex investment and financial management methods in China. Many investors who are not familiar with the forex market are unaware of the difference between the two and do not know which trading method to choose. Below, we will introduce the difference between forex margin trading and forex brokers service, to help investors understand how to choose between forex margin trading and firm trading.
The difference between forex margin and real offer mainly lies in the account opening method and trading characteristics:
1、 Real Forex Trading
To open a forex trading account, you need to apply at the bank counter, then purchase and deposit the funds into the account, sign a forex trading agreement with the bank, apply for online banking, and log inJust go to the bank website and use your personal computer at home to enter online banking for trading. Usually open an account for transactions at a bank, such as China Merchants Bank or Industrial and Commercial Bank of China. The biggest characteristic of forex firm trading is that the risk and return are relatively small. What are the forex margin trading platforms? The transaction fee (spread) is slightly higher, usually between 10 to 30 points. If operated well, the annual revenue is generally between 5% and 10%. Funds that are too small may have limited returns.
2、 Forex Margin Trading
Forexmargin trading is usually conducted through the internet, usually through domestic agents or directly applying for account opening on forex company websites, and then depositing the funds into the trading account for trading. The biggest characteristic of forex margin trading is high risk and high return. Forex margin trading is a leveraged model, with a maximum leverage of up to 400 times. If an investor does not have $100, under leverage, it is equivalent to trading at most $40000, greatly increasing the investor's return, but the corresponding risk will also increase exponentially. It is more suitable for investors with a certain understanding of the forex market to trade.
The Difference Between These Two:
1. The required principal is different, and the actual transaction requires a relatively large amount of principal, while forex margin trading generally only requires a small amount of funds.
2. The return to risk ratio is different, compared to margin trading, forex brokers has less risk and is suitable for most people to invest.
3. There are different policy tendencies, and currently policies support firm trading, while margin trading is strictly illegal.
4. The trading channels are different, and forex brokers is mainly completed through the banking system, while margin trading needs to be mediated by market traders, which carries certain system risks.
How to choose between forex margin and forex brokers? From the above introduction, it is not difficult to see that if investors have a large principal and pursue stable returns, they can choose forex brokers; If investors have a good understanding of the forex market, have relatively small initial funds, and bear certain risks, they can choose forex margin trading.
【 EBC Platform Risk Reminder and Disclaimer 】: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice.
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