Foreign exchange transactions are financial transactions aimed at exchange rates of different countries. Therefore, when you correctly grasp the future trend of the exchange rate of the trading currency, you may get potential profits. On the contrary, when your judgment is wrong, you may suffer potential losses. For example, according to your observation of the exchange rate between the euro and the dollar in the market, you think that the current dollar is undervalued relative to the euro, and you estimate that the dollar will strengthen in the future. So, you buy a certain amount of dollars in euros in advance. If the market trend is consistent with your judgment and the dollar appreciates against the euro, then you can sell the dollar for the euro and make a profit. On the contrary, if the dollar continues to depreciate against the euro, then you will lose money. We call this transaction aimed at the future direction of currencies holding long-term positions. In contrast, in view of the short-term fluctuations in the foreign exchange market, the trading behavior of fast-forward and fast-out is called holding short-term positions. In the foreign exchange market, in order to maximize profits, the two trading behaviors are often staggered.

In order to make a profit, fundamental analysis and technical analysis in foreign exchange transactions are also very important.

In any financial transaction, it is important to realize that as long as there is market speculation, risks and profits coexist. Foreign exchange transactions are no exception. You may gain huge profits in a short time, but you may also lose a lot. In this market, there is no clear method to correctly predict the unknown currency trend. But through some analysis and research on the market, the probability of making wrong judgments can be reduced. This kind of market analysis and research is divided into fundamental analysis and technical analysis.

Fundamental analysis and technical analysis are two basic methods of foreign exchange trading. Fundamental analysis focuses on the financial, economic and political situation of the world and different countries and its influence on the direction of the foreign exchange market. Technical analysis mainly focuses on the transaction price, trend chart and historical data of the market, and draws a judgment on the market trend. In short, the fundamental analysis studies the reasons and the technical analysis studies the results.