At present, the contract for difference is one of the most popular trading tools that the domestic residents have heard about, which is often referred to as margin trading. Investors buy and sell at the price of a commodity and do not involve transactions of that commodity entity. In theory, the commodity of CFD can be anything with floating price, including national indexes, foreign exchange, futures, stocks, precious metals and other commodities.
Because it does not involve the transaction of commodity (currency) itself, but only takes the margin as the risk guarantee, in order to control the risk of CFD and restrain excessive speculation, the financial regulatory agencies of all countries stipulate that the brokers or banks of CFD must have 100% margin
1. CFD is traded on margin. Margin ratios range from 3% for equity CFD to 1% for index CFD. In this way, the investor's capital utilization efficiency will be higher, because it only needs a small proportion of the total investment position to carry out a transaction, while enjoying all the benefits and risks brought by market fluctuations.
2. Selling a CFD is the same as buying, because it does not involve physical delivery. In this way, the CFD investors have the opportunity to make profits in the bear market and bull market (short-term intraday market changes), and can also avoid the long position risk in the spot market.
3. The CFD provides you with a way to conduct low-cost transactions with one account. All index, industry index, bond and commodity futures CFD transactions are commission free.
Foreign exchange refers to the exchange of one country's currency into another country's currency as a means of payment for international settlement, and its conversion rate is the foreign exchange rate.
Unlike the stock market and futures market, foreign exchange trading doesn't have a centralized trading place. Banks in various regions match each other through international foreign exchange brokers, and offer prices to each other through telephone or electronic trading online, and conduct transactions directly. Therefore, the foreign exchange market is a kind of inter-bank trading market. The foreign exchange trading time is actually the business hours of banks around the world.
The exchange rate of foreign currency will change with the political and economic events or market news around the world. Investors expect the direction of exchange rate change and accordingly buy or sell currencies, hoping to earn profits from it. Foreign exchange market is the largest financial investment market in the world.
On the one hand, foreign exchange is an inevitable product of international economic exchanges, and it also plays a media role in international trade, promoting the further development of international economic and trade relations. On the other hand, foreign exchange plays a very important linking role in international political exchanges, scientific and cultural exchanges and other fields.
1、As a pricing and payment instrument of international settlement, foreign exchange transfers the purchasing power between countries, making it possible for currency circulation between countries and facilitating international settlement. When precious metals are used as the means of international payment, international economic exchanges rely on the transportation of a large number of precious metals to each other, which brings many troubles and inconveniences to international economic exchanges and hinders the expansion and development of international economic exchanges. Using foreign exchange as a means of international payment instrument for international settlement not only saves the cost of transporting precious metals, but also shortens the time of payment and greatly facilitates international payment.
2、The emergence of foreign exchange has promoted the development of international trade. The use of foreign exchange for international settlement is characterized by safety, convenience, cost saving and time saving. Therefore, it accelerates the development process of international trade and expands the scope of international trade.
3、Foreign exchange can regulate the flow of funds in the world, adjust the imbalance of fund supply and demand, and accelerate the process of world economic integration. Generally speaking, the developed countries have excess funds, while the developing countries are short of funds. Foreign exchange can speed up the flow of funds between countries, facilitate international investment and capital transfer, and regulate the relationship between supply and demand of international capital
4、Foreign exchange can serve as a means of international reserve. A country needs a certain amount of international reserves to meet the needs of various international payments. As a means of international payment, foreign exchange is widely used in international settlement, so foreign exchange has become a very important reserve asset of all countries. If a country has a balance of payments deficit, it can use foreign exchange reserves to make up for it; if a country has many foreign exchange reserves, it means that it has strong international solvency. The important role of foreign exchange in international payment determines that it is an important means of international reserve, and it widely exists in the form of bank deposits and securities with good security and strong liquidity, bringing benefits to the holding countries.
1.Both long and short positions are available and there are opportunities to gain profits regardless of the rise and fall: to buy a stock, you have to wait for the stock price to rise to make money, while foreign exchange is available no matter whether rising or falling, that is to say, both long and short positions can gain profits.
2. High fund liquidity: the foreign exchange market is the most liquid financial market in the world, with a daily trading volume of more than 6 trillion US dollars. High liquidity means that the transaction can be completed simply and quickly, thus creating opportunities for traders to make profits through investment. At the same time, it also means that investors can remit funds into or out of the market at any time, with great liquidity and flexibility, without worrying about the problem of undertaking.
3. Leverage Trading (margin system) can make funds play a greater role: by using the way of CFD (margin system), make funds play a greater role. Leverage requires only a fraction of the full value of the corresponding position to be paid in advance. For example, a trader using a ratio of 100:1 means that a $100,000 transaction requires only $1,000 as margin, and the profit and loss level will reflect the full value of the position when it is at the closing position price point, so margin trading provides an opportunity to make a larger profit from a relatively small investment.
4.There are few trading varieties and more precise selection: there are thousands of stocks in the stock market. How to select stocks is a headache. But in the foreign exchange market, the currency combination is very limited. With low analytical cost，we can focus on these currency combinations, and quickly grasp their market fluctuations.
Blockchain is essentially a decentralized database. It refers to the technical scheme of collective maintenance of a reliable database through decentralization and distrust.
Blockchain technology is a kind of technical scheme that does not rely on the third party and stores, verifies, transmits and exchanges network data through its own distributed nodes. Therefore, from the perspective of financial accounting, some people regard blockchain technology as a large-scale network bookkeeping book with distributed and open decentralization. Anyone can use the same technical standards to add their own information at any time, extend blockchain, and continuously meet the needs of data entry brought by various needs
Generally speaking, blockchain technology refers to a way for the whole people to participate in bookkeeping. There is a database behind all the systems. You can think of the database as a big ledger. So it's very important who records this account book. At present, the account of the system is recorded by the system owner, like WeChat's account is recorded by Tencent, Taobao's account is recorded by Alibaba. But now in the blockchain system, everyone in the system has the opportunity to participate in bookkeeping. If there is any data change in a certain period of time, everyone in the system can perform bookkeeping. The system will judge the fastest and best bookkeeper in this period of time, write his recorded content into the ledger, and send the contents of the ledger to all other people in the system for backup. In this way, everyone in the system has a complete account book. We call this approach blockchain technology.
Blockchain technology is considered to be the most subversive technological innovation since the invention of the Internet. On the Internet, where trust cannot be established, it relies on clever distributed algorithms of cryptography and mathematics to enable participants to reach consensus without the need for any third party，and solve the problem of reliable transmission of trust and value at a very low cost.
1. 24-hour market trading, no opening or closing restrictions: In addition to weekends and major festivals in the country where the trading center is located, financial centers around the world operate by turns according to their positions, so that the foreign exchange market can trade continuously 24 hours. For example, when the Asian trading period ends, the European trading period begins, followed by the North American trading period, and then back to the Asian period. Investors are free to enter and exit the foreign exchange market at their own time without restriction.
2. It is the largest financial market in the world and is not easy to intervene by human beings: at present, the trading volume in the foreign exchange market is as high as 6 trillion US dollars a day, twice as much as China's current foreign exchange reserves (3.1 trillion US dollars, ranking first in the world's foreign exchange reserves), so it is difficult to control a single currency and brings a more just investment environment for investors.
3. Fast trading and profit making: at present, most of the foreign exchange transactions have been turned into online transactions, which only need to make a few clicks online to make profits.
4. High market transparency, no risk of being priced: foreign exchange prices are affected by international factors, such as politics, military affairs, economy, supply and demand, and even the interest rates set by the Central Bank of the local government... and so on. Although all these factors can affect the exchange rate, all of them are open and transparent information, so foreign exchange prices cannot be privately controlled by a single investor or group.
Financial Market refers to the activities and places with a certain scale of financing, currency lending and trading of securities. Financial market does not have to be in a fixed place, and transactions completed through electronic communication can also be considered as part of the financial market. The participants in the financial market are both the suppliers and demanders of funds. They can be individuals, enterprises, banks, brokers, securities companies, insurance companies, investment institutions and government agencies. The object of financial market transaction is capital goods of monetary form, with interest as the price. Interest is usually the cost of the transfer of the right to use funds or the division of profits generated by the participation of funds. Financial market is a large ecosystem. The production of goods and services, new asset forms and the assets inside and outside the financial market can affect each other.
It is not only the market economy that has a financial market. There can also be financial markets in the planned economy system, whose financial market scale is generally not as large as that in the market economy, and its operation mechanism is also very different from that in the market economy.