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Forex multi-account manager Z-X-N
Accepts global forex account operation, investment, and trading
Assists family office investment and autonomous management

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In a fundamental analysis system for two-way forex trading, traders can build an effective trend analysis framework by focusing on "interest rates" without having to get bogged down in a maze of complex macroeconomic data.

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Compared to multi-dimensional economic indicators like GDP growth, trade balance, and PMI, interest rates directly reflect a country's central bank's monetary policy direction and the intrinsic value of its currency. They are the core variable that determines the long-term trend of currency pairs. For forex traders seeking trend-based returns, accurately capturing the logic behind interest rate fluctuations is far superior to distracting themselves with complex fundamental data.
Lessons from global economic history show that over-reliance on comprehensive fundamental research may not provide effective guidance for investment and trading, and may even lead to falling into a "data trap." A remarkable phenomenon is that, despite extensive research on economic fundamentals during previous global economic crises (such as the 2008 subprime mortgage crisis and the 2020 pandemic), few of the world's top economists were able to predict the timing and intensity of the crises. This phenomenon isn't due to a lack of professional expertise on the part of economists, but rather to the inherent limitations of comprehensive fundamental research. The complexity of the macroeconomic system, data lags, and the dynamic nature of market expectations make accurately predicting market turning points based on fundamental data nearly impossible. More importantly, if the logic that fundamental research guarantees guaranteed investment returns holds true, then top economists who have long immersed themselves in fundamental analysis should generally be among the most profitable in the market. However, in reality, the identities of economists and successful investors often differ. This indirectly reinforces the view that, for trading, a precise focus on core variables is far more valuable than a comprehensive coverage of all data.
Returning to the foreign exchange market, the long-term trends of currency pairs are essentially driven by interest rate differentials. Traders can readily determine trend direction and volatility patterns by focusing solely on these differentials. When the interest rate differential between a currency pair remains within a narrow range (e.g., the difference between the benchmark interest rates of the two currencies remains consistently below 0.5%), it indicates that the monetary policies of the two countries are converging, the intrinsic value difference between the currencies is minimal, and the market lacks a clear trend-driven logic. Consequently, the currency pair is likely to enter a prolonged period of consolidation—prices fluctuate within a certain range with limited fluctuations, making it difficult to form a sustained, unilateral trend. However, when the interest rate differential enters a wide range (e.g., exceeding 1% and continuously widening), the situation is completely different: the higher-interest currency, due to its higher holding returns (such as interest income from carry trade strategies), attracts global capital inflows, driving its appreciation. The lower-interest currency, due to its lower holding returns, faces increased capital outflow pressure and depreciation. In this situation, the "positive interest rate differential" (i.e., the interest rate differential between the higher-interest currency and the lower-interest currency) has essentially locked in the currency pair's long-term trajectory. Traders simply need to position in this direction to capture trend-driven profits. To further identify turning points in interest rate fluctuations (signals of a trend extension or reversal), traders can find key clues by simply tracking the CPI (Consumer Price Index) of the currency's issuing country, without having to analyze complex economic data. As a core indicator of inflation, the CPI directly determines the direction of central bank interest rate policy. When a country's CPI continues to rise and exceeds the central bank's target (usually 2%), it indicates intensifying inflationary pressures, and the central bank is likely to initiate a cycle of interest rate hikes—using higher interest rates to curb aggregate demand and alleviate inflation. Conversely, when the CPI consistently falls below the target, or even risks deflation, the central bank is inclined to implement interest rate cuts—stimulating the economy and boosting inflation by lowering interest rates. This "CPI → inflation expectations → interest rate policy → monetary policy" transmission logic forms a simplified framework for forex fundamental analysis. Traders can predict the direction of interest rate adjustments based solely on CPI changes, without having to delve into other economic indicators, and thus position themselves for currency pair trend reversals. It's important to note that global central banks' interest rate policies are not completely independent, but rather exhibit a significant "Federal Reserve follow-through." As the world's core reserve currency, the Federal Reserve's monetary policy (interest rate hikes or cuts) can have spillover effects on the global exchange rate system through channels such as capital flows and trade settlements. If the Fed raises interest rates, the dollar's appeal increases, driving global capital to the US. Other countries, if they maintain low interest rates, face capital outflows and currency depreciation. Consequently, they are often forced to follow the Fed's rate hikes to mitigate "currency siphoning." If the Fed cuts interest rates, other countries will align with their own interest rates to prevent excessive currency appreciation that could impact exports. Only two types of countries are able to escape the Fed's monetary policy cycle: superpowers with strong economies and currencies (such as the Eurozone and China), which can balance external shocks through independent economic regulation. Countries with strict foreign exchange controls, however, can isolate themselves from the influence of external monetary policy by restricting cross-border capital flows. For regular forex traders, simply understanding this policy linkage and factoring in Fed policy when analyzing non-US interest rates can help them more accurately assess the changing trends in interest rate differentials.
In summary, fundamental analysis in two-way forex trading doesn't need to be "comprehensive," but rather should focus on "core variables": using interest rates as an anchor, determining trend direction through interest rate differentials, tracking interest rate policy inflection points with the CPI, and incorporating the Federal Reserve's policy linkage logic to revise judgments. This simplified and efficient analytical framework not only avoids interference from complex data but also accurately captures the core market contradictions. It far surpasses traditional "comprehensive fundamental research" and is more suited to the practical needs of forex trading: "grasping key contradictions and profiting from trend-based gains."

In the two-way forex trading landscape, forex traders often overlook the seriousness and formality of forex broker regulation.

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However, this neglect can pose significant risks to investors. The 2015 Swiss Franc Black Swan event is a prime example. At the time, the Swiss National Bank suddenly announced the removal of the Swiss franc's exchange rate floor against the euro. This move triggered significant volatility in the foreign exchange market and led to the collapse of numerous forex brokers. This incident not only sounded a wake-up call for investors but also prompted significant adjustments to global regulations regarding forex brokers.
Following this, countries around the world generally reduced leverage requirements for forex brokers. While this reduction in leverage reduced market risk to some extent, it also had profound consequences for the forex investment market. First, low leverage meant that forex brokers lost a significant number of retail traders. Retail traders are the primary force in the forex market, providing the majority of trading volume. These traders typically have limited capital and view the forex market as a way to get rich quick, even comparing it to online casinos. They are willing to take high risks because even if they lose, the losses are relatively small; and if they win, they anticipate a dramatic life-changing outcome. However, this approach overlooks a fundamental fact: even doubling returns on a small portfolio cannot achieve true financial freedom. In fact, due to their limited capital, even significant short-term gains are unlikely to transform their financial situation. This phenomenon is very common in the forex market, yet many investors fail to fully understand the risks involved.
Regulatory adjustments to forex brokerage leverage rates around the world have led to a significant exodus of retail traders with small capital. This has not only significantly reduced forex market liquidity but has also left many smaller forex brokers struggling, even unable to maintain operations. To survive, some forex brokers have resorted to operating under the guise of offshore entities, increasing leverage to attract risk-averse retail traders with small capital. Notably, most forex brokers with leverage exceeding 50x are based in offshore countries. These brokers exploit the relatively lax regulatory environment in offshore countries to offer high-leverage trading services, attracting a large number of investors seeking high-risk, high-return returns. However, this practice also presents numerous problems. Regulatory oversight in offshore countries is relatively weak, and it can be impossible to effectively oversee the operations of these brokers. This creates increased risk for investors when choosing offshore brokers, and if problems arise, investors' rights and interests are often difficult to protect.
In the forex market, the vast majority of retail traders with small capital end up losing money. This is a long-standing fact of life in the forex market. Despite this, many investors still enter the market with the dream of getting rich quick. However, reality is often harsh. Even the few retail traders with small capital who manage to generate consistent profits may face the problem of being unable to withdraw their profits. This phenomenon is particularly common among brokers in offshore countries, where regulation is relatively weak or even non-existent. Even if these traders file complaints, they often go unaddressed. The foreign exchange margin trading market is currently in trouble, partly due to the chaotic market conditions caused by a lack of regulation. This chaos not only harms investors' interests but also seriously hinders the healthy development of the foreign exchange investment market.

In two-way foreign exchange trading, investors should be wary of brokers claiming attractive terms such as "low spreads" or "no overnight interest rate spreads." These platforms are often associated with brokers with a high probability of engaging in betting.

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Specifically, during trading, some brokers use "ultra-low spreads" as a gimmick to attract investors. In fact, if the advertised spread is lower than the actual spread of the liquidity provider (LP), the broker itself faces the risk of losing spreads. In this case, the broker is likely acting as a betting partner, directly antagonizing retail investors—that is, rather than placing retail orders in the liquidity market, it instead takes them on its own. For such brokers, the risk appears low, as, from a probability perspective, most retail investors will ultimately lose money. However, in the event of widespread profit for retail investors, the broker may choose to refuse withdrawals to avoid bankruptcy due to full profit payments, thereby harming investor interests.
In addition, investors should also be wary of platforms claiming "no overnight spread." For currency pairs consisting of the eight major currencies—the US dollar, euro, yen, pound, Australian dollar, Canadian dollar, Swiss franc, and New Zealand dollar—the interest rates of major global currencies are generally pegged to the US dollar, resulting in relatively stable interest rate spreads, making the irrationality of such advertising less apparent. However, for currency pairs with higher interest rates, such as the Turkish Lira, South African Rand, and Mexican Peso, "no overnight spread" is virtually impossible to achieve under normal market conditions. Therefore, if a broker is not a compliant Islamic financial broker (which is exempt from overnight interest rates due to religious compliance) but claims to have no overnight spread on all currency pairs, it can be considered a fraudulent platform that lacks regulatory compliance and is likely attempting to evade its obligations to profitable investors.
In summary, when choosing a forex broker, investors should not be misled by superficial cost advantages. Instead, they should prioritize the platform's regulatory compliance, order execution model, and risk mitigation mechanisms to ensure the safety of their funds.

In the forex two-way trading system, short-term trading (typically referring to trading patterns with holding periods of several minutes to several hours) is significantly more difficult to profit from than long-term trading. This is the core reason why experienced forex investors generally advise ordinary traders against engaging in short-term trading.

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Specific analysis can be conducted from three dimensions: market characteristics, trading strategy biases, and risk control deficiencies:
First, the chaotic nature of short-term market trends and the random nature of fluctuations undermine the effectiveness of trading decisions.
Short-term price fluctuations in the forex market are significantly influenced by real-time news (such as breaking economic data and geopolitical rumors), liquidity fluctuations, and high-frequency trading algorithms. This results in a highly chaotic state of short-term trends, making it difficult to form a clear basis for trend analysis through technical or fundamental analysis. In terms of volatility, most major currency pairs (such as EUR/USD and USD/JPY) typically experience short-term intraday fluctuations between 0.1% and 0.3%. In some periods, due to low market volume, they even exhibit a narrow sideways trend, with volatility nearly stagnant. This combination of low volatility and high randomness makes it difficult for short-term traders to capture stable profit opportunities. Instead, they are more likely to make poor trading decisions due to market fluctuations such as "false breakouts" and "shock waves," ultimately leading to losses.
In contrast, long-term trends in the foreign exchange market (holding periods of several days to several months) are more aligned with macroeconomic logic (such as interest rate policy differences, economic growth expectations, and trade imbalances). These trends are clear-cut and long-lasting, providing traders with a more stable profit environment.
Second, the flawed profit logic of short-term trading forces traders to adopt high-risk, heavy-position strategies.
From the perspective of profit margin calculation, short-term forex trading has limited fluctuations (e.g., 10-30 pips). Even if a trader adopts a light position (e.g., a position holding less than 1%), the absolute profit from a single trade is extremely low, even if the direction is correctly determined. It is difficult to cover transaction costs (spreads, fees) and time. This "low profit expectation" conflicts with traders' desire for high short-term returns, leading many short-term traders to passively adopt a heavy position strategy (some even holding over 10%), attempting to compensate for the lack of fluctuations by increasing their positions.
Long-term trading, on the other hand, relies on a clear trend direction, with fluctuations of hundreds of pips. A light position (e.g., a position holding 1%-3%) can achieve substantial absolute profits without relying on a large position to amplify risk, and is more in line with the rational investment principle of "risk-reward balance."
Third, the risks of short-term heavy position trading are out of control, increasing the risk of liquidation.
When short-term traders adopt a heavy position strategy, their risk control requirements increase exponentially. Due to their excessively large positions, even a small adverse fluctuation in the forex price (e.g., 20-50 pips) can lead to significant losses (even exceeding 50%). Therefore, strict stop-loss mechanisms (such as fixed-point stop-losses or dynamic stop-losses) are essential to limit the maximum loss on a single trade. If short-term traders fail to set stop-losses or use unreasonable stop-losses, the account could reach its limit in a short period of time if faced with unexpected market fluctuations (e.g., an unexpected central bank interest rate hike or key data that falls short of expectations), resulting in the complete loss of principal.
In contrast, long-term, light-weight trading, due to its low position size, allows account losses to be kept within a manageable range even when prices fluctuate in the opposite direction (e.g., a single loss of no more than 2% of the account balance). Light-weight trading inherently provides a "risk buffer," eliminating the need for strict stop-loss settings and effectively mitigating the risk of liquidation, further contributing to the long-term stability of the trader's account.

In two-way trading in forex, the vast majority of small-capital, short-term traders are classified as "B-position" clients. This means their trade orders are placed directly with the forex broker, rather than being passed to liquidity providers (LPs) through straight-through processing (STP). In other words, these small-capital, short-term traders are effectively the counterparties of the forex broker, rather than actual market participants.

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In two-way trading in forex, clients are primarily categorized as "A-position" clients and "B-position" clients. A-position clients are traders whose orders are passed on to limited partners (LPs) through the STP model. These clients typically possess strong profitability or large capital reserves, allowing them to withstand significant market fluctuations. Forex brokers generate profits through commissions and spreads, rather than directly engaging in arbitrage trading. This model is relatively stable for brokers, but the returns are limited. However, A-position clients are often long-term investors, whose trading strategies and capital reserves make it difficult for brokers to profit from short-term fluctuations. Therefore, brokers typically avoid internal arbitrage trading with these clients' orders, instead passing them on to LPs to avoid unnecessary risk from market fluctuations.
B-position clients, by contrast, are primarily small-capital, short-term traders, typically day traders with high trading frequency and small capital reserves. These traders act as micro-liquidity providers in the forex market, but their trading strategies often struggle to generate profits. Due to the complexity and uncertainty of short-term trading, most small-capital, short-term traders ultimately lose money. Therefore, forex brokers typically accept these clients' orders directly, profiting from stop-loss orders, margin calls, frequent commissions, and spreads, rather than passing them on to LPs. This model makes forex brokers more likely to attract small-capital, short-term traders, as their trading behavior is more easily manipulated and profited by brokers.
This trading model also explains why forex brokers prefer small-capital, short-term traders over large-capital investors. Due to limited funds and frequent trading, small-capital, short-term traders often struggle to survive in the market for a long time. Their stop-loss orders and margin calls provide a stable source of income for brokers. Furthermore, the commissions and spreads generated by high-frequency trading also generate substantial profits for brokers. In contrast, large-capital investors, due to their larger capital base, typically adopt long-term investment strategies, are able to withstand significant market fluctuations, and are virtually immune to margin calls. Therefore, brokers are unable to profit from stop-loss orders and margin calls, and the profitability of large-capital investors also makes it difficult for brokers to generate high returns through spreads and commissions.
For small-cap, short-term traders, understanding their role in the forex market is crucial. They need to recognize that they are often the broker's counterparty, not true market participants. Therefore, choosing a transparent and regulated brokerage platform is crucial to ensure that orders are truly routed to limited partners (LPs) and not subject to internal betting. Furthermore, small-cap short-term traders should approach high-frequency trading with caution, manage their positions appropriately, and avoid overtrading that can lead to unnecessary losses.
In summary, in two-way forex trading, small-cap short-term traders, as clients in position B, face a higher risk of loss. Brokers profit by taking orders from these clients, leveraging stop-loss orders, margin calls, and high-frequency commissions. Large-cap investors, however, are a less popular client group for brokers due to their size and trading strategies. Understanding these market mechanisms can help traders make more informed decisions in the forex market, reduce risk, and improve their resilience.

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13711580480@139.com

+86 137 1158 0480

+86 137 1158 0480

+86 137 1158 0480

z.x.n@139.com

Mr. Z-X-N

China · Guangzhou

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