FOREX - the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world.
Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.
In the foreign exchange market there is little or no 'inside information'. Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.
Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar.
Unlike stocks and futures exchange, foreign exchange is indeed an interbank, over-the-counter (OTC) market which means there is no single universal exchange for specific currency pair. The foreign exchange market operates 24 hours per day throughout the week between individuals with forex brokers, brokers with banks, and banks with banks. If the European session is ended the Asian session or US session will start, so all world currencies can be continually in trade. Traders can react to news when it breaks, rather than waiting for the market to open, as is the case with most other markets.
Average daily international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study.
Like any market there is a bid/offer spread (difference between buying price and selling price). On major currency crosses, the difference between the price at which a market maker will sell ("ask", or "offer") to a wholesale customer and the price at which the same market-maker will buy ("bid") from the same wholesale customer is minimal, usually only 1 or 2 pips. In the EUR/USD price of 1.4238 a pip would be the '8' at the end. So the bid/ask quote of EUR/USD might be 1.4238/1.4239.
This, of course, does not apply to retail customers. Most individual currency speculators will trade using a broker which will typically have a spread marked up to say 3-20 pips (so in our example 1.4237/1.4239 or 1.423/1.425). The broker will give their clients often huge amounts of margin, thereby facilitating clients spending more money on the bid/ask spread. The brokers are not regulated by the U.S. Securities and Exchange Commission (since they do not sell securities), so they are not bound by the same margin limits as stock brokerages. They do not typically charge margin interest, however since currency trades must be settled in 2 days, they will "resettle" open positions (again collecting the bid/ask spread).
Individual currency speculators can work during the day and trade in the evenings, taking advantage of the market's 24 hours long trading day.
What is a pip?
Pip stands for "percentage in point" and it is the smallest increment by which a Forex cross price changes. Most currency pairs are quoted to four decimal places, meaning that a movement from 1.1850 to 1.1851 for a currency pair would constitute one pip. For a particular position, you can calculate the value of a single pip using the following formula. For instance, you know that the EURUSD is quoted with four decimals, so for a given position you can multiply the position amount by the value of one pip, or USD 0.0001. So, on a EURUSD 100,000 contract, one pip would equal USD 10. On a USDJPY 100,000 contract, one pip is equal to JPY 1,000 because USDJPY is quoted with only two decimals (meaning 1 pip = JPY 0.01).
What FX products can be traded?
Keytrade Pro supports the trading of Forex Spot, OTC Options and Forward Outrights, as well as a wide array of trade orders.
What is a currency pair?
A currency pair is a Forex instrument, also known as a cross, for example USDJPY. When you trade in Forex, you always trade currencies in pairs. Thus in the example of USDJPY, this pairing indicates that you trade U.S. dollars against Japanese yen. If you buy dollars, you pay in yen, and if you sell dollars you receive yen.
What is spot?
A direct trade on a market price with a standard settlement date (Value date) of 2 business days from the trade date.
What is the spread?
The difference between the Bid price (at which you can sell the trading instrument) and the Ask price (at which you can buy the trading instrument). For more information on the trading conditions at Keytrade Pro, go to your Keytrade Pro and click Account > Trading Conditions.
What does Value Date mean?
The date when the settlement of funds for a trade transaction will take place in your account. This is usually at spot (2 working days after the trade), but can be less or more days. This allows time for the necessary paperwork and cash transfers to be arranged.
What crosses can be traded?
Over 160 Forex currency crosses – more than any other online provider.
What is a Forward Outright?
An order to trade a Forex instrument at a fixed price on a fixed date. The price of the forward outright is the spot rate adjusted for the interest rate differential between the two currencies until maturity. Forex forward outrights enable you to take advantage of the interest rate differentials between two currencies and to hedge foreign exchange exposure risks. By purchasing a currency for a future date at a fixed price using a forward outright, you can avoid risky exposure to unpredictable foreign exchange fluctuations.
How are margins calculated on FX?
Keytrade Pro offers very low margin rates, enabling you to maximize your investing power. For detailed information visit: trading rates and trading conditions.
What is the cost of converting my Profit and Loss?
Currency conversions of profits and losses are done using the prevailing close rate as of 17:00 EST (New York Time) plus/minus 0.5%.
How can I use a Limit Order?
Limit orders are commonly used to enter a market and to take profit at predefined levels. Limit orders to buy are placed below the current market price and are executed when the Ask price hits or breaches the price level specified. (If placed above the current market price, the order is filled instantly at the best available price below or at the limit price.) Limit orders to sell are placed above the current market price and are executed when the Bid price breaches the price level specified. (If placed below the current market price, the order is filled instantly at the best available price above or at the limit price.) When a limit order is triggered, it is filled as soon as possible at the price obtainable on the market. Note that the price at which your order is filled may differ from the price you set for the order if the opening price of the market is better than your limit price.
How can I use a Stop Order?
Forex Stop orders are commonly used to exit positions and to protect investments in the event that the market moves against an open position. Stop orders to sell are placed below the current market level and are executed when the Bid price hits or breaches the price level specified. Stop orders to buy are placed above the current market level and are executed when the Ask price hits or breaches the price level specified.
Keytrade Pro supports a variety of stop orders, including Stop if Bid and Stop if Offered Orders.
Stop if Bid orders are commonly used to buy the applicable currency pair in a rising market. If the price level specified in the order is actually Bid on the market, the order will be filled at the price offered by the market maker. For example, if you sold GBPUSD at 1.4280, with a Stop Bid at 1.4330, the position would be closed (GBPUSD would be bought) if the Bid price hit or breached 1.4330. We recommend the use of Stop if Bid orders only to buy Forex positions. The use of Stop if Bid to sell Forex positions can result in positions being prematurely closed if a market event causes the Bid/Ask spread to temporarily widen.
Stop if Offered orders are commonly used to sell the applicable currency pair in a falling market. If the price level specified is actually offered in the market, the order will be filled at the price bid by market maker. For example, if you bought USDJPY at 132.00, with a Stop Offer at 131.50, the position would be closed (USDJPY would be sold) if the Offer price hit or breached 131.50 (in other words, if 131.50 is offered). We recommend the use of Stop if Offered orders only to sell Forex positions. The use of Stop if Offered orders to buy Forex positions can result in positions being prematurely closed if a market event causes the Bid/Ask spread to temporarily widen.
What are Related Trade Orders?
Related, or contingent, orders are trade orders linked together to create more complex trading strategies. There are several types of contingent orders, the most popular of which are If Done and O.C.O. orders. If Done orders (also known as slave orders) where a slave, or subordinate, order only becomes active if the first one is executed. For example, you might place a limit order to buy EURUSD and then, if this order is filled, a subsequent limit order to sell EURUSD if the spot price breaches a certain level. One Cancels the Other (O.C.O.) is an order sequence where the execution of one order cancels the other. O.C.O. orders are often used to place both a stop loss and a profit taking (limit) order around a position – the first of the orders to execute will automatically cancel the other.
What is Tom/Next?
"Tom" stands for tomorrow and means "the next working day after today" and "next" means "the next working day following". This term is used to describe the basis on which an open Forex position, if held at the end of the business day prior to its Value Date, is rolled over to a new value date.
What are the hours to trade FX?
Keytrade Pro is open for Forex trading whenever the market is open:
From Monday 05:00 Sydney local time (currently Sunday 19:00 GMT)
To Friday 17:00 New York local time (currently Friday 22:00 GMT)
What is a ticket fee threshold?
The minimum amount that a client can trade without incurring a ticket fee. For Forex trades below this threshold, a small ticket fee of USD 10 is added to the trade to cover administration costs.
What is FIFO?
FIFO = First In, First Out
If a client makes a trade that is the opposite of one or more existing open positions, e.g. buys EURUSD and already has two open short EURUSD positions, the system will use the FIFO principle and automatically close out the oldest of the open positions. In the example, that would mean closing out the oldest of the short EURUSD positions.
Whether you are planning to start a brand-new business, expand an existing company, or get financing for a business venture, you will need to write a business plan. A business plan not only lends your business a sense of credibility, but also helps you to cover all your bases, increasing your chances of success.
Although writing a business plan can be a lengthy, intimidating project, it is not necessarily difficult. Here is an overview of how to write a successful business plan.
What to Include in Your Business Plan
Your business plan needs to demonstrate that you have thoroughly considered all aspects of running your business. To that end, the standard business plan has nine major sections, covering everything from your business’s mission statement to a detailed financial analysis.
Executive Summary
The first – and most important – section of your business plan is the executive summary. This section is so important that it should literally be the first thing the reader sees – even before the table of contents! However, it should also be written last, as you’ll have a better understanding of the overall message of your business plan after you’ve researched and written the other sections.
One of the most important parts of the executive summary is the mission statement. The mission statement is only three or four sentences long, but it should pack the most punch out of everything else in your business plan: Those four sentences are responsible for not only defining your business, but also capturing the interest of your reader.
The rest of your executive summary should fill in the important details that the mission statement glosses over. For instance, your executive summary should include a short history of the business, including founder profiles and start date; a current snapshot, listing locations, numbers of employees, and products or services offered; and a summary of future plans and goals.
This section is a candidate for a bulleted format, which allows you to list main points in a manner that is easy to scan. Avoid using too much detail – remember, this section is a summary. A page or two is usually sufficient for an executive summary.
Market Analysis
The next section of your business plan focuses on market analysis. In order to show that your business has a reasonable chance for success, you will need to thoroughly research the industry and the market you intend to sell to. No bank or investor is going to back a doomed venture, so this section is sure to fall under especially close scrutiny if you are looking for financing.
Your market analysis should describe your industry, including the size, growth rate, and trends that could affect the industry. This section should also describe your target market – that is, the type or group of customers that your company intends to serve. The description of your target market should include detail such as:
• Distinguishing characteristics
• The needs your company or product line will meet
• What media and/or marketing methods you’ll use to reach them
• What percentage of your target market you expect to be able to wrest away from your competitors
In addition, your market analysis should include the results of any market tests you have done, and an analysis of the strengths and weaknesses of your competitors.
Company Description
After your market analysis, your business plan will need to include a description of your company. This section should describe:
• The nature of your business
• The needs of the market
• How your business will meet these needs
• Your target market, including specific individuals and/or organizations
• The factors that set you apart from your competition and make you likely to succeed
Although some of these things overlap with the previous section, they are still necessary parts of your company description. Each section of your business plan should have the ability to stand on its own if need be. In other words, the company description should thoroughly describe your company, even if certain aspects are covered in other sections.
Organization and Management
Once you have described the nature and purpose of your company, you will need to explain your staff setup. This section should include:
• The division of labor – how company processes are divided among the staff
• The management hierarchy
• Profiles of the company’s owner(s), management personnel, and the Board of Directors
• Employee incentives, such as salary, benefits packages, and bonuses
This goal of this section is to demonstrate not only good organization within the company, but also the ability to create loyalty in your employees. Long-term employees minimize human resource costs and increase a business’s chances for success, so banks and investors will want to see that you have an effective system in place for maintaining your staff.
Marketing and Sales Management
The purpose of the marketing and sales section of your business plan is to outline your strategies for marketing your products or services. This section also plans for company growth by describing how the growth could take place.
The section should describe your company’s:
• Marketing methods
• Distributions methods
• Type of sales force
• Sales activities
• Growth strategies
Product or Services
Following the marketing section of your business plan, you will need a section focusing on the product or services your business offers. This is more than a simple description of your product or services, though. You will also need to include:
• The specific benefits your product or service offers customers
• The specific needs of the market, and how your product will meet them
• The advantages your product has over your competitors
• Any copyright, trade secret, or patent information pertaining to your product
• Where any new products or services are in the research and development process
• Current industry research that you could use in the development of products and services
Funding Request
Only once you have described your business from head to toe are you ready to detail your funding needs. This section should include everything a bank or investor needs in order to understand what type of funding you want:
• How much money you need now
• How much money you think you will need over the next five years
• How the money you borrow will be used
• How long you will need funding
• What type of funding you want (i.e. loans, investors, etc.)
• Any other terms you want the funding arrangement to include
Financials
The financials section in your business plan supports your request for outside funding. This section provides an analysis of your company’s prospective financial success. The section also details your company’s financial track record for the past three to five years, unless you are seeking financing for a startup business.
The financials section should include:
• Company income statements for prior years
• Balance sheets for prior years
• Cash flow statements for prior years
• Forecasted company income statements
• Forecasted balance sheets
• Forecasted cash flow statements
• Projections for the next five years – every month or quarter for the first year, with longer intervals for the remaining years
• Collateral you can use to secure a loan
The financials section is a great place to include visuals such as graphs, particularly if you predict a positive trend in your projected financials. A graph allows the reader to quickly take in this information, and may do a better job of encouraging a bank or investor to finance your business. However, be sure that the amount of financing you are requesting is in keeping with your projected financials – no matter how impressive your projections are, if you are asking for more money than is warranted, no bank or investor will give it to you.
Appendices
The appendix is the final section in your business plan. Essentially, this is where you put all of the information that doesn’t fit in the other eight sections, but that someone – particularly a bank or investor – might need to see.
For instance, the market analysis section of your business plan may list the results of market studies you have done as part of your market research. Rather than listing the details of the studies in that section, where they will appear cumbersome and detract from the flow of your business plan, you can provide this information in an appendix.
Other information that should be relegated to an appendix includes:
• Credit histories for both you and your business
• Letters of reference
• References that have bearing on your company and your product or service, such as magazines or books on the topic
• Company licenses and patents
• Copies of contracts, leases, and other legal documents
• Resumes of your top managers
• Names of business consultants, such as your accountant and attorney
Writing a Successful Business Plan
Despite the quantity of information contained in your business plan, it should be laid out in a format that is easy to read. Just like with any piece of business writing, it is important to craft your business plan with your intended audience in mind – and the bankers, investors, and other busy professionals who will read your business plan almost certainly won’t have time to read a tedious document with long-winded paragraphs and large blocks of text.
Business plans for startup companies and company expansions are typically between twenty to forty pages long, but formatting actually accounts for a lot of this length. A strong business plan uses bullet points throughout to break up long sections and highlight its main points. Visuals such as tables and charts are also used to quickly relay specific information, such as trends in sales and other financial information. These techniques ensure that the reader can skim the business plan quickly and efficiently.
Think of your audience as only having fifteen minutes to spend on each business plan that comes across their desks. In that fifteen minutes, you not only have to relay your most important points, but also convince the reader that your business venture merits a financial investment. Your best bet is a well-researched business plan, with an organized, easy-to-read format and clear, confident prose
Forex trading signals are triggered when technical
conditions signal a good trading opportunity. Email and SMS (text message) are
popular delivery methods for forex trading signal alerts, but Web-based option
can often be best if you're at your PC when the signal emerges.
For example, some forex trading signal services have automatic pop-up software
to indicate the perfect entry (or exit) point of a trade. These will often
include candlestick currency charts that may flash or blink so long as the entry
(or exit) point remains valid. If you trust the service provider and you don't
have any conflicting information telling you the trade is bad, right then is the
perfect time to execute the trade.
But other forex trading services specialize in catering to traders who have
medium- or long-term strategies, rather than short-term. A medium- or long-term
trade may have a forex trading signal that remains valid for an entire day (or
longer), so for traders specializing in longer-duration trades, these forex
trading signals services can be delivered via email or SMS at no detriment.
Another way to use signals is to pair them with a service that automatically
executes your trades. This can be a risky prospect for traders who prefer to use
forex trading signals as mere recommendations and like to do their own homework
before making their trades, and such services are better for short-term traders
who don't have time to do their own analysis before pulling the trigger on a
trade, anyway. The good news is that, thanks to modern technology, forex traders
have the option to choose which style of trading -- and which style of
corresponding forex trading signals -- works best for them.
Some forex trading signal services allow you to sign up for a free trial;
usually consisting of ten or fourteen days. Take advantage of these free trials
to make sure your style of trading is compatible with their forex trading
signals. If you are new to the forex market, then you can sign up for a free
trial and use the signals with a free "practice" account in which you trade
"demo money". This way you can learn how to use signals without undue risk.
But ultimately, if you want to make money in the forex market, you're going to
have to risk money in a real account, and unless you are incredibly good (or
lucky), you're probably also going to have to spend money on a good forex
trading signal service. The forex market is not for passive investors -- it is
for active traders who wish to rely solely on their wits... And a little help
from forex trading signals, of course!
The Mini trading account uses the same state-of-the-art trading platform as the regular trading account. There is no additional software to download.
Account Size
The minimum amount that is required to open a Mini trading account is $300. Of course, due to the high leverage and the extremely volatile nature of the Forex market, the recommended minimum investment size is $2,000. Note: Leverage without proper risk management can lead to large losses as well as gains.
Trade Size
On the Mini trading platform all trades are executed in standard sizes of 10,000 base currency per one lot. There is no maximum trading volume on the Mini trading platform.
Pip/Tick Value
Profit and loss is easy to calculate when trading on the Mini platform. In the EUR/USD and many other currency pairs, a one pip (or tick) movement in the exchange rate is equal to a one-dollar gain or loss in the account value per lot (and approximately $1 in the 17 other currency pairs).
Margin Requirement
Up to 200:1 Leverage: Clients must have approximately 1/2% of the value of the positions they hold in their account for each lot of currency being traded (approximately 200:1 leverage). Leverage without proper risk management, this high degree of leverage can lead to large losses as well as gains. This equates to $50 per lot (10,000 units). This amount does not change after 5:00 PM New York time, which is the rollover cut off, but stays constant at approximately 1/2% per lot the entire day and overnight.
Guaranteed Limited Risk: There is also an important safety feature imbedded in this system that prevents clients from losing more money than they have in the account. Should the account equity -- meaning the total floating value of the account -- fall below the margin requirement of approximately 1/2% per lot, the dealing desk may close all positions.
Spreads
Dealing Spreads
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These spreads may vary depending on market conditons.
Currency Pair Spread Currency Pair Spread
EUR/USD 03 pips EUR/CHF 07 pips
USD/JPY 04 pips EUR/CAD 10 pips
USD/CHF 05 pips EUR/AUD 15 pips
USD/CAD 05 pips GBP/JPY 09 pips
GBP/USD 05 pips GBP/CHF 15 pips
EUR/JPY 04 pips CAD/JPY 10 pips
AUD/USD 04 pips CHF/JPY 09 pips
NZD/USD 04 pips AUD/CAD 10 pips
EUR/GBP 03 pips AUD/JPY 08 pips
NZD/JPY 10 pips AUD/NZD 13 pips
GBP/AUD 15 pips EUR/NZD 30 pips
UK Venture Created For Trading
The United Kingdom is getting a new chance to do some market trading as a new business venture appears on the Forex playing field. The Rosenthal Collins Group, LLC and the GAIN Capital Group, LLC, are joining together in an effort to open up operations and opportunities in the United Kingdom. Rosenthal Collins is one of the trading community’s leaders in independent futures, a clearing firm for this type of trading. GAIN is a leader in the market of Forex trading.
The new entity will be known as RCG GAIN Limited and they plan on offering online Forex and futures trading to self-directed investors that live in the United Kingdom. They intend to expand their business in the European Union upon seeing how the firm does with their English clients. So far, RCG GAIN has received authority from the Financial Services Authority in the United Kingdom to offer their services.
The two firms are delighted over the partnership and feel that they are embarking on an important trading venture. They feel that they compliment each other with their combined expertise in futures and other related technology concerns. With strong financial foundations, GAIN’s industry leading breakthrough in Forex, and their shared entrepreneurial culture, their clientele is going to get the best of both worlds as well as high customer service.
The venture has been formulated so that RCG will provide futures services while GAIN will provide advanced Forex trading technology. GAIN will also be leading the joint venture in anything that has to do with marketing. They will share a corporate staff that will be overseen by an executive officer and compliance officer, both of whom will report to a combined board of directors. In addition to their brokerage and trading operations, RCG GAIN Limited also plans on future collaborations that will have to do with cross-marketing initiatives.
According to Maureen Downs, RCG’s president, “We see forex as a very attractive growth area, and view this endeavor as an opportunity to expand our long-established futures services. The UK venture with GAIN represents the latest step in our global growth strategy, and we look forward to identifying further opportunities throughout Europe as this initiative takes hold.”
Currently, Forex is the most actively traded market in the world, exceeding $3.2 trillion on a daily basis. It has gained acceptance on an international level and the volume of trade increased 500% over a five year period.
