CURRENCY TRADER. Currency Trading. Introduction to currency futures. What are currency futures?

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "CURRENCY TRADER. Currency Trading. Introduction to currency futures. What are currency futures?"

Transcription

1 Introduction to currency futures The South African Rand is one of the most volatile currencies in the world; it can exhibit moves of greater than 0.20c in a single day of trading versus the US dollar. This volatility allows investors to speculate by being in the market for a relatively short period of time and offers excellent liquidity supported by market makers. The EURO/ZAR, GBP/ZAR, EURO/USD, GBP/USD also offer excellent liquidity but they are slightly less volatile when compared to the USDZAR offering moves ranging between 0.01c-0.10c in a single trading day. The Rand is a floating exchange rate which simply means a currency is free to float to the relative levels against other currencies as is determined by market forces of supply and demand with limited intervention by monetary authorities. There are a number of reasons for South African Rand volatility. The Rand s traded value is closely linked to changing market sentiment. The Rand is often described as a proxy for emerging markets and frequently takes the brunt of economic developments in the United States and Europe. Secondly, South Africa s economy is commodity based. The South African Rand therefore shares behavioural characteristics with other commodity based currencies such as the Canadian Dollar and the Australian Dollar. Commodity prices of oil and copper and especially those of precious metals such gold and palladium are priced in US Dollars, impact commodity currencies and subsequently the Rand. As an emerging market currency the ZAR is also influenced by market events that affect the emerging markets and their currencies such as the Polish Zloty, Brazilian Peso, Russian Ruble, Turkish Lira and Hungarian Forint. In addition, the traded value of the Rand is a gauge of market sentiment with respect to South African domestic political and economic fundamentals. An additional factor is that South Africa is geographically situated half way between Asia and the US markets, an important factor considering that currency markets operate globally 24 hours a day. South Africa currency traders therefore have access to 3 trading days/times zones (Asia/Europe/US) in a single South African trading day between 09:00 and 17:00 What are currency futures? The Johannesburg Stock Exchange (JSE) introduced currency future contracts during 2007 to allow local traders the ability to gain exposure to foreign currency movements relative to the Rand without affecting their offshore allowance. Essentially, currency future contracts allow traders to benefit from the movement in the currency futures rate between the Rand and several major international currencies. Currency traders can also buy and sell currency pairs in order to obtain "long" or "short" exposure - in other words make money while the currency exchange rates move up or down. This happens automatically when the investor decides to either buy Dollar and sell Rand - or buy Rand and sell Dollar. Currency traders do not have to deposit cash to match the whole value of the futures position as currency future contracts are geared. Currency traders need only deposit enough cash to cover the initial margin, which is a fixed rand amount per contract equal to between 10% and 20% per contract. (See below) As one of the few full time dedicated currency futures brokers PSG Online possesses the expertise and skills to allow clients to trade currencies with confidence. We offer world class risk systems and an expert team of professional currency traders who will provide you with regular currency trading ideas to decipher market movements.

2 What is the difference between currency futures and forex trading? Those looking to profit from fluctuations in currency valuations have two currency trading forums, spot forex trading and currency futures. In general, spot forex traders physically exchange the underlying currencies on the settlement date, there is an actual exchange of the underlying assets. For example, when a person goes to a bank to do a currency exchange, that person is participating in the forex trading. The main difference between spot forex trading and currency futures is when the currency trading price is determined and when the currency pair exchange takes place. The price of currency futures is determined when the currency futures contract is signed and the currency pair is exchanged on the future delivery date. The price of spot forex trading is also determined at the point of trade, but the currency pair exchange takes place immediately or shortly thereafter. It is important to note that currency traders in the futures currency futures markets are speculators who usually close out their positions before the date of settlement, so most currency futures contracts do not last until the delivery date. Currency futures are often used as hedging instruments by forex trader. Currency futures have opened up the market to smaller currency futures traders to trade currencies effectively through gearing. Reasons for trading currency futures Currency futures are standardised currency exchange contracts that are traded on the JSE's currency exchange, YieldX, an exchange with a centralised order book. This means that buy and sell prices are posted in real-time onto the central market by the relevant market makers. This allows for transparent pricing of the currency exchange. Being a listed product has numerous benefits: 1. Futures are geared products, which mean currency traders do not have to deposit cash to cover the full value of the position. 2. Futures allow individual investors to take a view on the movement of the currency futures rate and provide them with access to favourable rates usually reserved for larger corporate clients. 3. Tight spreads and low currency trading costs allow clients currency futures traders to enter and exit positions in the knowledge that profits are not being paid away each time there is a trade on the account. 4. Importers and exporters can dynamically hedge their currency risk far more efficiently using futures due to the ease of entering and exiting futures positions and the low cost per trade. 5. The presence of dedicated market makers ensures market liquidity and ensures that currency traders can open and close currency exchange contracts with multiple counterparties. 6. The daily mark-to-market process allows clients the ability to track their profit or loss situation and to adjust their portfolio accordingly. 7. Once the position has been closed out all settlement occurs in Rand. What currency futures contracts are available? Futures offer traders looking for a hedge a variety of advantages as a means to manage their currency risk and speculators a low cost option to express their currency view. The currency pairs currently available to trade against the Rand on the JSE's YIELDX exchange are. 1. US Dollar 2. Euro 3. British Pound 4. Aussie Dollar 5. Japanese Yen 6. Canadian Dollar 7. Swiss Franc One can also trade synthetic crosses for example, EUR/USD, GBP/USD and GBP/EUR. Synthetic trades are becoming increasingly popular amongst investors as the margin requirements are considerably less than Rand bases crosses.

3 How does a currency future work? Futures trade in standard contracts, with quarterly expiry dates of (19 March/19June/19Sep/19Dec). Most speculators will trade the near dated contract as this is the most liquid contract or most tradable contract. One contract exposes the investor to of the underlying foreign currency. (i.e. USD 1,000.00). This gives investors a gearing ratio of 1:11. In order to open the futures position; the investor must deposit the necessary cash equal to the margin with the JSE. This amount is calculated by multiplying the number of contracts by the margin per contract. Margin is a good faith deposit and is returned at the end of the trade, less losses or plus profits. Margin is calculated as follows [number of contracts x (margin amount x 2)]. Margin amount for example on March 12 USDZAR contract is R per contract; however investors must deposit double margin per contract. For example if you bought 5 USD/ZAR March 12 contracts, the margin required would be 5 x (R360.00x2) = R Remember margin/collateral is a deposit and not a fee. Brokerage is R18.00 per contract. For example if you bought 5 contracts, brokerage requires would be 5 x R18.00 = R90.00 (Brokerage is paid to open and close the position). The future is cash settled, there is no physical delivery of foreign currency. Risks of trading currency futures Trading carries risks and derivative trading is no exception. Currency futures are geared instruments. One contract exposes you to in the foreign underlying currency. One contract requires R in margin. With this leverage/gearing you are able to make large profits from small initial layouts of capital. However the opposite is also true. Should the trade move against you, you could incur large losses as a result of the leverage/gearing. There is a risk that you may lose more money than you initially invested. The most important thing to remember is that not every trade will be a successful trade resulting in profits. The secret to trading currencies is to input tight stop losses and not to allow losses to run away. This way you limit losses and manage your risk. With every trade you should also have a target in price in mind. Be strict and diligent. Don t trade on emotion; trade on fundamentals, a strategy, logic with some common sense. Once your target price is reached, execute and get out of the trade. Re enter the market with a new trade and trading strategy. It is very tempting to ride a trade into profit and stay in the trade looking for larger gains. This can go wrong and you may well ride the trade all the way back into losses before closing your position. Some of the advantages of trading currency futures include. 1. A known currency rate can be traded and locked in. 2. The spot market price and currency future price move in union with each other. The future price trades at a premium to the spot as has incorporated the interest rate differential between the two chosen currencies from present to the contract expiry date. 3. There is no need to hold the futures contract till expiry, the contract can be closed or traded out at anytime. 4. Due to the fact that the contracts trade on the South African Futures Exchange (SAFEX), investors enjoy a liquid market with dedicated market makers making competitive prices with tight spreads. 5. The currency contracts can be rolled every three months.

4 Why trade with PSG when there are other brokers? PSG is a well known and respected financial services provider in South Africa. PSG is regulated by the financial services board of South Africa as well as a member of the Johannesburg Stock Exchange. PSG traders are competent traders who are approved by the JSE and authorised to trade on the JSE.PSG is able offer a competitive trading brokerage of R18.00 per contract, this includes the JSE clearing and settle fee. The spreads/prices that you receive are the same spreads/prices that are trading on the JSE; PSG does not add to or adjust the spreads/prices. There is no monthly account fee. You only pay when you trade and payment is per contract. As a PSG client, you are giving free access to our PSG online trading platform which will allow you to trade in your own time and in the comfort of your home or office. In addition you may also or phone an order through to the trade desk at no extra charge. You will receive daily market research, market commentary, trader s views, trading ranges and trade ideas to help you make informed and educated investment decisions. You are welcome to call the trade floor and talk directly to the trader and ask any questions or advise with regards to trading of currencies How can you start trading currencies futures? You are welcome to contact our skilled currency futures team at or via They will arrange the opening of the account and ensure that all your trades are executed at the best available price. You will also receive daily statements showing your margin and cash movement. The PSG Online trading platform is efficient and well-resourced; we have the systems and support to help you. If you wish to start trading using the PSG Online platform, you will have the use of a number of free services. You can register online to start trading currencies at the following address Who is the currency trader at PSG? Our PSG Online derivatives trader is Lynden Reabow. He is an experienced trader who has worked in the financial services sector for 10 years. He has a B Sc from Stellenbosch University and has been with PSG Online since August Before this he was London-based, and worked at the Royal Bank of Scotland and Citigroup. He is willing to guide investors through the process of trading currencies. You are welcome to call Lynden so that he can walk you through currency trading over the phone. Lynden will be able to offer experienced advice and guidance regarding the currency markets in addition to trade ideas and other trading related questions that you may have. He also produces a daily morning report that is sent to all clients in the morning that summaries global commentary, offers fundamental and technical analysis, economic data to watch, his view on the market and a technical trading range for the day. Lynden is contactable on or and his address is

5 Glossary American style option An option that can be exercised at any time between the purchase of the option and expiry. Arbitrage Taking advantage of price discrepancies in two related markets, to lock in a profit. Base currency The currency in an exchange rate quotation expressed in terms of the number of units of the other currency in the quotation (the variable currency). (Also home currency) Bearish Expecting a fall in financial instrument / market prices. In foreign exchange: a fall in the price of the base currency. Bid The price at which the dealer quoting a price or rate is prepared to buy. Bullish Expecting rising financial instrument / market prices. In foreign exchange: a rise in the price of the base currency. Call option An option, without the obligation, to buy an agreed amount of a particular financial instrument or commodity, at an agreed rate, on or before an agreed date. Cash Market (Also spot market) The market for trading a financial instrument, where settlement takes place on the normal delivery date. As opposed to futures, options or forwards (where delivery is for a later date than normal). Cross-rate An exchange rate between any two currencies, neither of which is the US dollar. Currency option An option which gives the owner the right to buy or sell the indicated amount of foreign currency at a specified price on or before a specific date. Currency risk The risk that a fluctuation in exchange rates may adversely impact on the value of an investment denominated in a foreign currency. Currency swap An exchange of a series of cash flows in one currency for a series of cash flows in another currency, at agreed intervals over an agreed period, used to change the currency exposure of the investment. Derivative Any financial instrument whose value is derived from another, such as a forward foreign exchange rate, a futures contract, an option, an interest rate swap etc. Double A quote of a buy and sell price for a currency. ECB European Central Bank. European style option An option that may be exercised only at expiry.

6 Glossary Exercise (an option) To require the seller of an option to fulfil his obligation in terms of the option. Expiry date The final date on which an option can be exercised. Fed Federal Reserve Bank of New York. Authorised financial services provider dealing in forex investments Forward (agreement) A deal for settlement later than the normal settlement date for that particular financial instrument. Forward foreign exchange All foreign exchange transactions to be settled more than two business days in the future. Forward outright (Outright forward) An outright currency in exchange for another currency for delivery on a fixed future date beyond the normal (spot) settlement date. Forward swap The purchase of one currency against another for settlement on one date, with a simultaneous sale to reverse the transaction on a subsequent settlement date. Futures contract A deal, traded on a recognised exchange, to buy or sell some financial instrument or commodity for settlement on a future date. Hedge Protect against the risks arising from potential movements in exchange rates, interest rates or other variables. Initial margin Collateral placed with a clearing house at the time of a deal, against the possibility that the market price will move against the trader, thereby leaving the counter party with a credit risk. Interest rate differential The differences in interest rates between two countries. Intervention (intervene) A government, or central bank taking action to influence the value of its currency. In-the-money An option whose strike price is more advantageous to the option holder than the current market rate. Leverage Means the usage of a relatively small foreign currency margin deposit to control a much larger foreign currency amount. Also known as gearing. The leverage employed is usually expressed as a ratio being the ratio of the margin deposit to the total value of levered foreign currency. LIBOR London Interbank offered rate, the rate at which banks are willing to lend to other banks. Liquid An investment easy to sell or a position easy to close out. Long Owning or buying a given currency or asset.

7 Glossary Margin A specified amount of money required by a dealer to insure against risk of lossesfrom outstanding positions. Mark to market Revalue a position at current market rates. Market maker A dealer in foreign exchange who will risk his own capital by offering both buy and sell quotes in a currency. Market makers add liquidity to the market. Offer The offer price of a foreign exchange quotation is the rate at which a dealer will sell the base currency and buy the terms currency. The offer price is therefore the price the client will buy Option The right, without any obligation, to undertake a particular deal. Out-of-the-money An option whose strike is less advantageous to the option holder than the current market rate. Over-the-counter (OTC) A transaction dealt privately between any two parties, rather than dealt on an exchange. Outright forward (Forward outright) An outright purchase or sale of one currency in exchange for another currency for delivery on a fixed date in the future other than the spot settlement date. Par In foreign exchange, when the forward outright and spot exchange rates are equal, the forward swap is zero or par. Pip The smallest incremental value by which an exchange rate move is measured in the foreign exchange market. Points The last two decimal places in an exchange rate. Premium The amount by which one currency is more expensive, in terms of another currency for forward delivery than for spot. Put option An option, without the obligation, to sell an agreed amount of a particular financial instrument or commodity, at an agreed rate, on or before an agreed date. Short Not owning or a selling of a given currency or asset. Speculation A deal undertaken because the dealer expects prices to move in his favour. Spot (spot rate; spot market) A deal to be settled on the customary settlement date for that particular market. In the foreign exchange market, this is for value in two working days time.

8 Glossary Spread The difference between the bid and offer prices in a quotation. Strike price/rate The price or rate at which a holder of an option can insist on the underlying transaction being fulfilled. Volatility A measure of how much the price of a financial instrument fluctuates within a specific time period. Writer The Seller of an option. Yield The interest rate that can be earned on an investment.

Currency Derivatives Guide

Currency Derivatives Guide Currency Derivatives Guide What are Futures? In finance, a futures contract (futures) is a standardised contract between two parties to buy or sell a specified asset of standardised quantity and quality

More information

The purpose of this ebook is to introduce newcomers to the forex marketplace and CMTRADING. Remember that trading in forex is inherently risky, and

The purpose of this ebook is to introduce newcomers to the forex marketplace and CMTRADING. Remember that trading in forex is inherently risky, and The purpose of this ebook is to introduce newcomers to the forex marketplace and CMTRADING. Remember that trading in forex is inherently risky, and you can lose money as well as make money. Manage your

More information

KEY INFORMATION DOCUMENT

KEY INFORMATION DOCUMENT KEY INFORMATION DOCUMENT PSG WEALTH CURRENCY FUTURES TRADING ACCOUNT TRADING ACCOUNT PAGE 0 This document is a summary of key information about the PSG Wealth currency futures trading account. It will

More information

YIELD X CURRENCY FUTURES BROCHURE JUNE 2009

YIELD X CURRENCY FUTURES BROCHURE JUNE 2009 1 YIELD X CURRENCY FUTURES BROCHURE JUNE 2009 2 Currency Futures for corporate clients The Currency Futures market on the JSE was implemented in order to further develop South Africa s financial markets

More information

Currency Futures trade on the JSE s Currency Derivatives Trading Platform

Currency Futures trade on the JSE s Currency Derivatives Trading Platform Currency Futures trade on the JSE s Currency Derivatives Trading Platform DERIVATIVE MARKET Currency Derivatives Currency Futures www.jse.co.za Johannesburg Stock Exchange Currency Futures & Options trade

More information

Chapter 5. The Foreign Exchange Market. Foreign Exchange Markets: Learning Objectives. Foreign Exchange Markets. Foreign Exchange Markets

Chapter 5. The Foreign Exchange Market. Foreign Exchange Markets: Learning Objectives. Foreign Exchange Markets. Foreign Exchange Markets Chapter 5 The Foreign Exchange Market Foreign Exchange Markets: Learning Objectives Examine the functions performed by the foreign exchange (FOREX) market, its participants, size, geographic and currency

More information

Trading forex is buying one currency while at the same time selling a different currency.

Trading forex is buying one currency while at the same time selling a different currency. F O R E I G N E X C H A N G E B A S I C S T E R M S U S E D I N F O R E X T R A D I N G The foreign exchange market is global, and it is conducted over-the-counter (OTC) through the use of electronic trading

More information

Seminar. Global Foreign Exchange Markets Chapter 9. Copyright 2013 Pearson Education. 20 Kasım 13 Çarşamba

Seminar. Global Foreign Exchange Markets Chapter 9. Copyright 2013 Pearson Education. 20 Kasım 13 Çarşamba Seminar Global Foreign Exchange Markets Chapter 9 9- Learning Objectives To learn the fundamentals of foreign exchange To identify the major characteristics of the foreign-exchange market and how governments

More information

Online Share Trading Currency Futures

Online Share Trading Currency Futures Online Share Trading Currency Futures pic Currency Futures Introduction Currency futures contracts can be hard-working additions to any investor s or trader s portfolio. They provide a way to hedge the

More information

Ch. 6 The Foreign Exchange Market. Foreign Exchange Markets. Functions of the FOREX Market

Ch. 6 The Foreign Exchange Market. Foreign Exchange Markets. Functions of the FOREX Market Ch. 6 The Foreign Exchange Market Topics FOREX (or FX) Markets FOREX Transactions FOREX Market Participants FOREX Rates & Quotations Cross Rates and Arbitrage Foreign Exchange Markets The FOREX market

More information

NEW TO FOREX? FOREIGN EXCHANGE RATE SYSTEMS There are basically two types of exchange rate systems:

NEW TO FOREX? FOREIGN EXCHANGE RATE SYSTEMS There are basically two types of exchange rate systems: NEW TO FOREX? WHAT IS FOREIGN EXCHANGE Foreign Exchange (FX or Forex) is one of the largest and most liquid financial markets in the world. According to the authoritative Triennial Central Bank Survey

More information

Forex Basics brought to you by MatrasPlatform.com

Forex Basics brought to you by MatrasPlatform.com Forex Basics brought to you by MatrasPlatform.com Table of Content What is FOREX... 3 FOREX Basics... 4 Trading Hours... 4 What Is Traded on FOREX?... 4 The Six Majors... 4 Currency Pair Distribution...

More information

1. HOW DOES FOREIGN EXCHANGE TRADING WORK?

1. HOW DOES FOREIGN EXCHANGE TRADING WORK? XV. Important additional information on forex transactions / risks associated with foreign exchange transactions (also in the context of forward exchange transactions) The following information is given

More information

General Forex Glossary

General Forex Glossary General Forex Glossary A ADR American Depository Receipt Arbitrage The simultaneous buying and selling of a security at two different prices in two different markets, with the aim of creating profits without

More information

The foreign exchange market is global, and it is conducted over-the-counter (OTC)

The foreign exchange market is global, and it is conducted over-the-counter (OTC) FOREIGN EXCHANGE BASICS TERMS USED IN FOREX TRADING: The foreign exchange market is global, and it is conducted over-the-counter (OTC) through the use of electronic trading platforms, or by telephone through

More information

Evolution of Forex the Active Trader s Market

Evolution of Forex the Active Trader s Market Evolution of Forex the Active Trader s Market The practice of trading currencies online has increased threefold from 2002 to 2005, and the growth curve is expected to continue. Forex, an abbreviation for

More information

OPTIONS EDUCATION GLOBAL

OPTIONS EDUCATION GLOBAL OPTIONS EDUCATION GLOBAL TABLE OF CONTENTS Introduction What are FX Options? Trading 101 ITM, ATM and OTM Options Trading Strategies Glossary Contact Information 3 5 6 8 9 10 16 HIGH RISK WARNING: Before

More information

Online Share Trading Currency Futures

Online Share Trading Currency Futures Online Share Trading Currency Futures Wealth warning: Trading Currency Futures can offer significant returns BUT also subject you to significant losses if the market moves against your position. You may,

More information

CommSeC CFDS: IntroDuCtIon to FX

CommSeC CFDS: IntroDuCtIon to FX CommSec CFDs: Introduction to FX Important Information This brochure has been prepared without taking account of the objectives, financial and taxation situation or needs of any particular individual.

More information

FX Options NASDAQ OMX

FX Options NASDAQ OMX FX Options OPTIONS DISCLOSURE For the sake of simplicity, the examples that follow do not take into consideration commissions and other transaction fees, tax considerations, or margin requirements, which

More information

A new landmark in trading

A new landmark in trading A new landmark in trading DERIVATIVES MARKET Equity Derivatives Dividend Futures www.jse.co.za Johannesburg Stock Exchange The JSE in collaboration with Deutsche Bank and Investec Capital Markets is launching

More information

An Introduction to. CME Foreign Exchange Products

An Introduction to. CME Foreign Exchange Products An Introduction to CME Foreign Exchange Products What Are Futures and Options? Futures contracts are standardized, legally binding agreements to buy or sell a specific product or financial instrument in

More information

Foreign Exchange Market INTERNATIONAL FINANCE. Function and Structure of FX Market. Market Characteristics. Market Attributes. Trading in Markets

Foreign Exchange Market INTERNATIONAL FINANCE. Function and Structure of FX Market. Market Characteristics. Market Attributes. Trading in Markets Foreign Exchange Market INTERNATIONAL FINANCE Chapter 5 Encompasses: Conversion of purchasing power across currencies Bank deposits of foreign currency Credit denominated in foreign currency Foreign trade

More information

IntroductIon to commsec cfds

IntroductIon to commsec cfds Introduction to CommSec CFDs Important Information This brochure has been prepared without taking account of the objectives, financial and taxation situation or needs of any particular individual. Because

More information

Single Stock Futures ( SSF ) Simple and constant gearing

Single Stock Futures ( SSF ) Simple and constant gearing Single Stock Futures ( SSF ) Simple and constant gearing 1 Content Situation 3 Simple geared share trading simple constant gearing single stock futures Solution 4 What are single stock futures? 5 Gearing

More information

MICHAEL HODGES AND BRETT COOPER

MICHAEL HODGES AND BRETT COOPER WHY COPY TRADE FOREX MICHAEL HODGES AND BRETT COOPER WHAT IS FOREX COPY TRADING Forex copy trading is a relatively new way of trading currency. It takes a lot of the risk and hassle out of trading and

More information

There are two types of options - calls and puts.

There are two types of options - calls and puts. Options on Single Stock Futures Overview Options on single Stock Futures An SSF option is, very simply, an instrument that conveys to its holder the right, but not the obligation, to buy or sell an SSF

More information

Chapter 1.2. Currencies Come in Pairs

Chapter 1.2. Currencies Come in Pairs Chapter 1.2 Currencies Come in Pairs 0 GETTING STARTED You know the advantages of trading forex, and you are excited to start trading. Now you need to learn what this market is all about. How does it work?

More information

Getting Started With Forex Trading: A Forex Primer. Member NASD, NYSE, SIPC, and NFA

Getting Started With Forex Trading: A Forex Primer. Member NASD, NYSE, SIPC, and NFA Getting Started With Forex Trading: A Forex Primer Member NASD, NYSE, SIPC, and NFA 1 Important Information and Disclaimer: TradeStation Securities, Inc. seeks to serve institutional and active traders.

More information

The World s Elite Trading School. The Trusted Source for Online Investing and Day Trading Education Since 1994. What is a Forex?

The World s Elite Trading School. The Trusted Source for Online Investing and Day Trading Education Since 1994. What is a Forex? What is a Forex? Forex is the market where one currency is traded for another Unlike stocks and futures exchange, foreign exchange is indeed an interbank, over-the-counter (OTC) market which means there

More information

Learn to Trade FOREX II

Learn to Trade FOREX II Lesson 1 The Forex Market The Foreign Exchange market, also referred to as the "FX market" or "Spot FX", is the largest financial market in the world with daily average turnover of US$1.9 trillion. Unlike

More information

General Risk Disclosure

General Risk Disclosure General Risk Disclosure Colmex Pro Ltd (hereinafter called the Company ) is an Investment Firm regulated by the Cyprus Securities and Exchange Commission (license number 123/10). This notice is provided

More information

AN INTRODUCTION TO THE FOREIGN EXCHANGE MARKET

AN INTRODUCTION TO THE FOREIGN EXCHANGE MARKET DUKASCOPY BANK SA AN INTRODUCTION TO THE FOREIGN EXCHANGE MARKET DUKASCOPY BANK EDUCATIONAL GUIDE AN INTRODUCTION TO THE FOREIGN EXCHANGE MARKET www.dukascopy.com CONTENTS INTRODUCTION TO FOREX CURRENCY

More information

Single Stock Futures

Single Stock Futures Single Stock Futures Single Stock Futures (or Individual Equity Futures) are exchange traded derivative instruments offering investors amplified exposure to price movements in a wide array of listed shares.

More information

Chapter 1.2. Currencies Come in Pairs

Chapter 1.2. Currencies Come in Pairs Chapter 1.2 Currencies Come in Pairs 0 GETTING STARTED You know the advantages of trading forex, and you are excited to start trading. Now you need to learn what this market is all about. How does it work?

More information

RISK DISCLOSURE STATEMENT PRODUCT INFORMATION

RISK DISCLOSURE STATEMENT PRODUCT INFORMATION This statement sets out the risks in trading certain products between Newedge Group ( NEWEDGE ) and the client (the Client ). The Client should note that other risks will apply when trading in emerging

More information

Chapter 16: Financial Risk Management

Chapter 16: Financial Risk Management Chapter 16: Financial Risk Management Introduction Overview of Financial Risk Management in Treasury Interest Rate Risk Foreign Exchange (FX) Risk Commodity Price Risk Managing Financial Risk The Benefits

More information

AN INTRODUCTION TO TRADING CURRENCIES

AN INTRODUCTION TO TRADING CURRENCIES The ins and outs of trading currencies AN INTRODUCTION TO TRADING CURRENCIES A FOREX.com educational guide K$ $ kr HK$ $ FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited is a member

More information

Reading: Chapter 19. 7. Swaps

Reading: Chapter 19. 7. Swaps Reading: Chapter 19 Chap. 19. Commodities and Financial Futures 1. The mechanics of investing in futures 2. Leverage 3. Hedging 4. The selection of commodity futures contracts 5. The pricing of futures

More information

Intro to Forex and Futures

Intro to Forex and Futures Intro to Forex and Futures 1 Forex Trading Forex is a term meaning foreign exchange, and refers to trading the currency of one country against the currency from another country simultaneously. Over $1.4

More information

Answers to Concepts in Review

Answers to Concepts in Review Answers to Concepts in Review 1. Puts and calls are negotiable options issued in bearer form that allow the holder to sell (put) or buy (call) a stipulated amount of a specific security/financial asset,

More information

NEW TO TRADING FOREX

NEW TO TRADING FOREX NEW TO TRADING FOREX WHAT IS THE FOREIGN EXCHANGE MARKET Trading is a business like any other There is no physical market Trading Hours: 24 hours a day 6 days a week Regions: [EST] Asia: Tokyo 7pm-3am

More information

A guide to managing foreign exchange risk

A guide to managing foreign exchange risk A guide to managing foreign exchange risk CPA Australia Ltd ( CPA Australia ) is one of the world s largest accounting bodies with more than 122,000 members of the financial, accounting and business profession

More information

INTRODUCTION. This program should serve as just one element of your due diligence.

INTRODUCTION. This program should serve as just one element of your due diligence. FOREX ONLINE LEARNING PROGRAM INTRODUCTION Welcome to our Forex Online Learning Program. We ve always believed that one of the best ways to protect investors is to provide them with the materials they

More information

MARGIN FOREIGN EXCHANGE AND FOREIGN EXCHANGE OPTIONS

MARGIN FOREIGN EXCHANGE AND FOREIGN EXCHANGE OPTIONS CLIENT SERVICE AGREEMENT Halifax New Zealand Limited Client Service Agreement Product Disclosure Statement for MARGIN FOREIGN EXCHANGE AND FOREIGN EXCHANGE OPTIONS Halifax New Zealand Limited Financial

More information

Currency Options. www.m-x.ca

Currency Options. www.m-x.ca Currency Options www.m-x.ca Table of Contents Introduction...3 How currencies are quoted in the spot market...4 How currency options work...6 Underlying currency...6 Trading unit...6 Option premiums...6

More information

MICHAEL HODGES AND BRETT COOPER

MICHAEL HODGES AND BRETT COOPER WHY TRADE FOREX MICHAEL HODGES AND BRETT COOPER WHY DO YOU WANT TO TRADE FOREX Why do you want to trade forex? For that matter, why would you or anyone want to trade forex? Is it because of the access

More information

Trading CFDs with Trader Dealer ABN 17 090 611 680 (AFSL NO 333297)

Trading CFDs with Trader Dealer ABN 17 090 611 680 (AFSL NO 333297) Trading CFDs with Trader Dealer ABN 17 090 611 680 (AFSL NO 333297) Pages 1. Overview 3 2. What is a CFD? 3 3. Why Trade CFDs? 3 4. How Do CFDs Work? 4 4.1 Margin 4 4.2 Commission 5 4.3 Financing 6 4.4

More information

Introduction to Equity Derivatives on Nasdaq Dubai NOT TO BE DISTRIUTED TO THIRD PARTIES WITHOUT NASDAQ DUBAI S WRITTEN CONSENT

Introduction to Equity Derivatives on Nasdaq Dubai NOT TO BE DISTRIUTED TO THIRD PARTIES WITHOUT NASDAQ DUBAI S WRITTEN CONSENT Introduction to Equity Derivatives on Nasdaq Dubai NOT TO BE DISTRIUTED TO THIRD PARTIES WITHOUT NASDAQ DUBAI S WRITTEN CONSENT CONTENTS An Exchange with Credentials (Page 3) Introduction to Derivatives»

More information

Content. Executive Summary. What is a CFD? Who are the participants? Advantages of trading CFDs. Features and benefits of CFDs. Reasons for using CFDs

Content. Executive Summary. What is a CFD? Who are the participants? Advantages of trading CFDs. Features and benefits of CFDs. Reasons for using CFDs Corporate Retail Contracts and Investment for Difference Banking Content Executive Summary What is a CFD? Who are the participants? Advantages of trading CFDs Features and benefits of CFDs Reasons for

More information

What are Currency Options

What are Currency Options What are Currency Options DERIVATIVE MARKET Currency Derivatives Currency Options www.jse.co.za Johannesburg Stock Exchange An Option is a powerful financial tool because it is optional for the purchaser,

More information

An Introduction to Single Stock Futures. Brett Duncan / Richard Hirsch: Corporate and Investment Banking Kurt Pagel: Online Share Trading

An Introduction to Single Stock Futures. Brett Duncan / Richard Hirsch: Corporate and Investment Banking Kurt Pagel: Online Share Trading An Introduction to Single Stock Futures Brett Duncan / Richard Hirsch: Corporate and Investment Banking Kurt Pagel: Online Share Trading A new age instrument that provides a link between two kinds of financial

More information

MARGIN FOREIGN EXCHANGE

MARGIN FOREIGN EXCHANGE PRODUCT DISCLOSURE STATEMENT MARGIN FOREIGN EXCHANGE Halifax Investment Services Limited Australian Financial Services Licence No. 225973 Date 20th October 2014 HALIFAX Product Disclosure Statement 1 IMPORTANT

More information

CHAPTER 8 SUGGESTED ANSWERS TO CHAPTER 8 QUESTIONS

CHAPTER 8 SUGGESTED ANSWERS TO CHAPTER 8 QUESTIONS INSTRUCTOR S MANUAL: MULTINATIONAL FINANCIAL MANAGEMENT, 9 TH ED. CHAPTER 8 SUGGESTED ANSWERS TO CHAPTER 8 QUESTIONS. On April, the spot price of the British pound was $.86 and the price of the June futures

More information

International Finance Prof. A. K. Misra Department of Management Indian Institute of Technology, Kharagpur

International Finance Prof. A. K. Misra Department of Management Indian Institute of Technology, Kharagpur International Finance Prof. A. K. Misra Department of Management Indian Institute of Technology, Kharagpur Lecture - 7 Features of Foreign Exchange Market Good morning, today we will discuss features of

More information

Advanced forms of currency swaps

Advanced forms of currency swaps Advanced forms of currency swaps Basis swaps Basis swaps involve swapping one floating index rate for another. Banks may need to use basis swaps to arrange a currency swap for the customers. Example A

More information

CM-Equity AG. General Information and Risk Disclosure for Foreign Exchange (Forex) Transactions ( General Information and Risk Disclosure )

CM-Equity AG. General Information and Risk Disclosure for Foreign Exchange (Forex) Transactions ( General Information and Risk Disclosure ) CM-Equity AG General Information and Risk Disclosure for Foreign Exchange (Forex) Transactions ( General Information and Risk Disclosure ) Contents I. General Informations regarding Foreign Exchange (Forex)...

More information

BEAR: A person who believes that the price of a particular security or the market as a whole will go lower.

BEAR: A person who believes that the price of a particular security or the market as a whole will go lower. Trading Terms ARBITRAGE: The simultaneous purchase and sale of identical or equivalent financial instruments in order to benefit from a discrepancy in their price relationship. More generally, it refers

More information

RISK DISCLOSURE STATEMENT FOR FOREX TRADING AND IB MULTI- CURRENCY ACCOUNTS

RISK DISCLOSURE STATEMENT FOR FOREX TRADING AND IB MULTI- CURRENCY ACCOUNTS RISK DISCLOSURE STATEMENT FOR FOREX TRADING AND IB MULTI- CURRENCY ACCOUNTS Rules of the U.S. National Futures Association ("NFA") require Interactive Brokers ("IB") to provide you with the following Risk

More information

Introduction, Forwards and Futures

Introduction, Forwards and Futures Introduction, Forwards and Futures Liuren Wu Zicklin School of Business, Baruch College Fall, 2007 (Hull chapters: 1,2,3,5) Liuren Wu Introduction, Forwards & Futures Option Pricing, Fall, 2007 1 / 35

More information

Dual Currency Placement

Dual Currency Placement Dual Currency Placement Dual Currency Placement If you have international financial interests and are prepared to accept a currency risk in exchange for the opportunity to earn a potential return, a Dual

More information

Evolution Strategy. Evolution Highlights. Chryson Evolution Strategy & Performance 2012-2013

Evolution Strategy. Evolution Highlights. Chryson Evolution Strategy & Performance 2012-2013 Evolution Strategy Chryson Evolution Strategy & Performance 20-20 Evolution Highlights Trading with defined strategy Trade CFDs only in FTSE 100 companies Utilising short and long positions Due to the

More information

DERIVATIVES Presented by Sade Odunaiya Partner, Risk Management Alliance Consulting DERIVATIVES Introduction Forward Rate Agreements FRA Swaps Futures Options Summary INTRODUCTION Financial Market Participants

More information

THE POWER OF FOREX OPTIONS

THE POWER OF FOREX OPTIONS THE POWER OF FOREX OPTIONS TOPICS COVERED Option basics Call options Put Options Why trade options? Covered call Covered put Hedging your position using options How to repair a trading position THE POWER

More information

Reference Manual Currency Options

Reference Manual Currency Options Reference Manual Currency Options TMX Group Equities Toronto Stock Exchange TSX Venture Exchange TMX Select Equicom Derivatives Montréal Exchange CDCC Montréal Climate Exchange Fixed Income Shorcan Energy

More information

An introduction to the foreign exchange market Moorad Choudhry September 2002

An introduction to the foreign exchange market Moorad Choudhry September 2002 An introduction to the foreign exchange market Moorad Choudhry September 2002 The market in foreign exchange is an excellent example of a liquid, transparent and immediate global financial market. Rates

More information

C Evolution General Brochure 1114:C Gen Evolution Broch 0314 24/11/2014 12:22 Page 1 Evolution Strategy

C Evolution General Brochure 1114:C Gen Evolution Broch 0314 24/11/2014 12:22 Page 1 Evolution Strategy Evolution Strategy Introduction to Chryson Chryson is a boutique stockbroking firm, operating from Glasgow. We are regulated by the Financial Conduct Authority, reference 491208, and have been trading

More information

Module 10 Foreign Exchange Contracts: Swaps and Options

Module 10 Foreign Exchange Contracts: Swaps and Options Module 10 Foreign Exchange Contracts: Swaps and Options Developed by: Dr. Prabina Rajib Associate Professor (Finance & Accounts) Vinod Gupta School of Management IIT Kharagpur, 721 302 Email: prabina@vgsom.iitkgp.ernet.in

More information

Derivative Users Traders of derivatives can be categorized as hedgers, speculators, or arbitrageurs.

Derivative Users Traders of derivatives can be categorized as hedgers, speculators, or arbitrageurs. OPTIONS THEORY Introduction The Financial Manager must be knowledgeable about derivatives in order to manage the price risk inherent in financial transactions. Price risk refers to the possibility of loss

More information

TRADING STRATEGIES FOR DERIVATIVES MARKET

TRADING STRATEGIES FOR DERIVATIVES MARKET TRADING STRATEGIES FOR DERIVATIVES MARKET 1 AGENDA Definition of Derivatives Origin of Derivatives Basic types of Derivatives Benefits of Trading Derivatives Trading Strategies 2 Definition of Derivatives

More information

Contracts for Difference (CFDs)

Contracts for Difference (CFDs) Contract for Difference (CFDs) and FCA Disclosure Requirements What are Contract for Difference (CFDs) CFDs (also known as Synthetic Equity Swaps (SES)) are Over the Counter (OTC) transactions which allow

More information

Improving Foreign Exchange

Improving Foreign Exchange Improving Foreign Exchange Transaction Effectiveness Introduction Investment advisors have a fiduciary obligation to obtain the most favorable terms in executing securities trades for their clients. For

More information

Introduction to Forex Trading

Introduction to Forex Trading Introduction to Forex Trading The Leader in Rule-Based Trading 1 Important Information and Disclaimer: TradeStation Securities, Inc. seeks to serve institutional and active traders. Please be advised that

More information

POLICY STATEMENT Q-22

POLICY STATEMENT Q-22 POLICY STATEMENT Q-22 DISCLOSURE DOCUMENT FOR COMMODITY FUTURES CONTRACTS, FOR OPTIONS TRADED ON A RECOGNIZED MARKET AND FOR EXCHANGE-TRADED COMMODITY FUTURES OPTIONS 1. In the case of commodity futures

More information

Powerful tools for investing, speculating or hedging

Powerful tools for investing, speculating or hedging Powerful tools for investing, speculating or hedging DERIVATIVE MARKET Equity Derivatives Single Stock Futures www.jse.co.za Johannesburg Stock Exchange Single Stock Futures are powerful tools for investing,

More information

Product Disclosure Statement

Product Disclosure Statement Product Disclosure Statement Sumo Forex Limited Level 4, 228 Queen Street, Auckland, 1010, New Zealand Tel: +6498871044 Email: support@sumoforex.com 1. Important Information and Disclaimer 1.1 Financial

More information

RISK DISCLOSURE STATEMENT

RISK DISCLOSURE STATEMENT RISK DISCLOSURE STATEMENT You should note that there are significant risks inherent in investing in certain financial instruments and in certain markets. Investment in derivatives, futures, options and

More information

CHAPTER 7 SUGGESTED ANSWERS TO CHAPTER 7 QUESTIONS

CHAPTER 7 SUGGESTED ANSWERS TO CHAPTER 7 QUESTIONS INSTRUCTOR S MANUAL: MULTINATIONAL FINANCIAL MANAGEMENT, 9 TH ED. CHAPTER 7 SUGGESTED ANSWERS TO CHAPTER 7 QUESTIONS 1. Answer the following questions based on data in Exhibit 7.5. a. How many Swiss francs

More information

MCQ on International Finance

MCQ on International Finance MCQ on International Finance 1. If portable disk players made in China are imported into the United States, the Chinese manufacturer is paid with a) international monetary credits. b) dollars. c) yuan,

More information

Plus500AU Pty Ltd. Product Disclosure Statement

Plus500AU Pty Ltd. Product Disclosure Statement Plus500AU Pty Ltd Product Disclosure Statement Product Disclosure Statement Our Contact Details Issuer: PLUS500AU Pty Ltd ACN 153 301 681 Address: Level 19, 1 O Connell Street Sydney NSW 2000 Australia

More information

NAB Foreign Exchange Transactions. Full Participation FX Solutions Products Product Disclosure Statement

NAB Foreign Exchange Transactions. Full Participation FX Solutions Products Product Disclosure Statement NAB Foreign Exchange Transactions Full Participation FX Solutions Products Product Disclosure Statement Effective date of issue 3 September 2012 Important information Issuer and contact details This Product

More information

ASX CFD market fundamentals

ASX CFD market fundamentals Course #: Title Course 1 ASX CFD market fundamentals Topic 1: The ASX CFD Market... 3 What are CFDs?... 3 The popularity of ASX CFDs has arisen from two main features:... 3 ASX CFDs offer additional features

More information

3. The Foreign Exchange Market

3. The Foreign Exchange Market 3. The Foreign Exchange Market The foreign exchange market provides the physical and institutional structure through which the money of one country is exchanged for that of another country, the rate of

More information

FOREX. made easy. UNDERSTANDING THE BASICS. An educational tool by Blackwell Global.

FOREX. made easy. UNDERSTANDING THE BASICS. An educational tool by Blackwell Global. FOREX made easy UNDERSTANDING THE BASICS. An educational tool by Blackwell Global. Risk Warning: Forex and CFDs are leveraged products and you may lose your initial deposit as well as substantial amounts

More information

MASTER THE MARKET IN 10 MINUTES

MASTER THE MARKET IN 10 MINUTES MASTER THE MARKET IN 10 MINUTES HIGH RISK INVESTMENT WARNING Trading Foreign Exchange (Forex) and Contracts for Differences (CFDs) is highly speculative, carries a high level of risk and may not be suitable

More information

FxPro Education. Introduction to FX markets

FxPro Education. Introduction to FX markets FxPro Education Within any economy, consumers and businesses use currency as a medium of exchange. In the UK, pound sterling is the national currency, while in the United States it is the US dollar. Modern

More information

CHAPTER 22: FUTURES MARKETS

CHAPTER 22: FUTURES MARKETS CHAPTER 22: FUTURES MARKETS PROBLEM SETS 1. There is little hedging or speculative demand for cement futures, since cement prices are fairly stable and predictable. The trading activity necessary to support

More information

Introduction to Foreign Exchange. Andrew Wilkinson

Introduction to Foreign Exchange. Andrew Wilkinson Introduction to Foreign Exchange Andrew Wilkinson Risk Disclosure Options and Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading

More information

Index, Interest Rate, and Currency Options

Index, Interest Rate, and Currency Options CHAPTER 3 Index, Interest Rate, and Currency Options INTRODUCTION In an effort to gauge the market s overall performance, industry participants developed indexes. Two of the most widely followed indexes

More information

PRODUCT DISCLOSURE STATEMENT FOR MARGIN FX & CONTRACTS FOR DIFFERENCE

PRODUCT DISCLOSURE STATEMENT FOR MARGIN FX & CONTRACTS FOR DIFFERENCE PRODUCT DISCLOSURE STATEMENT FOR MARGIN FX & CONTRACTS FOR DIFFERENCE This document provides important information about Margined Foreign Exchange and Contracts for Difference contracts to help you decide

More information

Margin and Exposure 14878.0351 348939.487 34598.6325 66875.0449

Margin and Exposure 14878.0351 348939.487 34598.6325 66875.0449 14878.0351 348939.487 34598.6325 66875.0449 34838.0371 34898.5321 94898.6327 54798.0321 44898.0324 54695.3522 96898.0321 24848.6323 44898.0321 34898.0328 14878.0351 348939.487 34598.6325 66875.0449 34838.0371

More information

Section 1 Important Information... 2. Section 2 Regulatory Guide 227... 2. Section 3 Features... 3. Section 4 How to Trade... 8

Section 1 Important Information... 2. Section 2 Regulatory Guide 227... 2. Section 3 Features... 3. Section 4 How to Trade... 8 CONTENTS Section 1 Important Information... 2 Section 2 Regulatory Guide 227... 2 Section 3 Features... 3 Section 4 How to Trade... 8 Section 5 Significant Risks... 32 Section 6 Costs, Fees & Charges...

More information

SYLLABUS The ACI Dealing Certificate (Prometric Code: 3I0-008)

SYLLABUS The ACI Dealing Certificate (Prometric Code: 3I0-008) SYLLABUS The ACI Dealing Certificate (Prometric Code: 3I0-008) Examination delivered in ENGLISH and GERMAN The ACI Dealing Certificate is a foundation programme that allows candidates to acquire a working

More information

Introduction to Forex Trading

Introduction to Forex Trading Introduction to Forex Trading The Leader in Rule-Based Trading 1 Important Information and Disclaimer: TradeStation Securities, Inc. seeks to serve institutional and active traders. Please be advised that

More information

TOPFX. General Questions: FAQ. 1. Is TOPFX regulated?

TOPFX. General Questions: FAQ. 1. Is TOPFX regulated? General Questions: 1. Is TOPFX regulated? TOPFX has been a regulated broker since April 2011, when it was granted a license by the Cyprus Securities and Exchange Commission (http://www.cysec.gov.cy/en-

More information

CHAPTER 9 INTERNATIONAL FINANCIAL MARKETS

CHAPTER 9 INTERNATIONAL FINANCIAL MARKETS CHAPTER 9 INTERNATIONAL FINANCIAL MARKETS LEARNING OBJECTIVES: 1. Discuss the purposes, development, and financial centers of the international capital market. 2. Describe the international bond, international

More information

Margin FX and CFDs Product Disclosure Statement 26 April 2016

Margin FX and CFDs Product Disclosure Statement 26 April 2016 Margin FX and CFDs 26 April 2016 Issuer: Forex Capital Trading Pty Ltd AFSL No. 306400 and ABN 69 119 086 270 1 P a g e 1. Important Information 1.1 About this PDS This PDS is issued by Forex Capital Trading

More information

Guide to Online Forex Trading

Guide to Online Forex Trading Start Trading and Making Money in Forex WebTrader and MetaTrader If this is your first time coming across the online Forex market, then you have come to the right place! This guide will provide you with

More information

International Derivatives

International Derivatives International Derivatives "Ever dreamed of owning Nokia, BP or Coca-Cola?" November 2008 Copyright JSE Limited 2008 What are International Derivatives? International Derivatives (IDX) are Cash Settled

More information