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The Forex Trading Handbook
Trading Hours
The trading desk is open 24 hours a day from 10:00am EST Sunday
through
17:00
pm EST Friday.
Currency Pairs
24-hour trading is available
in the following currency pairs: EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD,
AUD/USD, EUR/JPY, EUR/GBP, EUR/CHF, GBP/JPY, AUD/JPY, CHF/JPY, EUR/AUD, GBP/CHF, NZD/USD,
AUD/NZD, GBP/CAD, EUR/NZD, AUD/CHF, NZD/CAD, USD/HKD, SGD/JPY,
USD/SEK,
EUR/NOK, EUR/DKK, CAD/JPY, NZD/JPY, EUR/CAD, AUD/CAD, GBP/AUD,
GBP/NZD, NZD/CHF, CAD/CHF, USD/SGD, USD/NOK, USD/DKK, EUR/SEK.
Dealing Spread
Normal dealing spreads are
2-5 pips for the major currency pairs.
The spreads are transparent and are the same on the demo
platform.
Trading Minimums
- Mini Accounts:
Minimum transaction
size for mini accounts is 1/10th standard sized lot, or 10,000
of the base currency, with a minimum margin deposit of 0.1%
(100:1 leverage). For example, a US$10,000 position would
require an initial margin deposit of US$100.
- Standard Accounts:
Minimum transaction size for standard accounts is 1 lot, or
100,000 of the base currency, with a minimum margin deposit of
1% (100:1 leverage). For example, a US$100,000 position would
require an initial margin deposit of US$1,000.
No
Fees
Forex.ca is commission-free cash
forex trading!
FOREX.ca is compensated for its services through the bid/ask
spread.
Price Quotes
Clients have the ability to execute trades directly from real
time streaming bid/ask quotes. Live prices are continuously
published to clients via the trading platform, and traders can
at any time click on the current bid or offer and
instantaneously execute a trade. Prices are updated
automatically as market conditions dictate.
Trading over the
Internet
Executing a deal with us via the Internet is a simple two-step
process. Simply enter the number of lots and then click on the
bid (buy) or offer (sell) for the currency pair you wish to
trade - your deal is automatically executed. The dealing
software automatically calculates the initial margin requirement
based upon the notional amount of the deal, and if sufficient
funds are available in your account, will accept the
transaction. Deals are confirmed online, normally within one
second, and the system instantaneously updates both your open
position and calculates your current P&L.
Phone Trading
Live clients may trade over the telephone 24 hours a day, from
Sunday at 1700 ET through Friday at 1630 ET. When trading via
phone, our dealers will quote the same tight spreads available
via the dealing platform. All trades executed via the phone are
subject to a pre-deal margin availability check and will be
manually entered into the customer's account for integrated P&L
analysis and reporting. All telephone calls are recorded for the
safety of both parties.
Phone Dealing Procedure
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Immediately
state your ID and Password.
-
State your
interest. Always be sure to include the number of lots and the
currency pair you are interested in.
Example: "I would
like a price on 5 lots of Euro/Dollar."
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The Dealer
will then provide a 2-way price quote.
Example: "Euro/Dollar
is 1.2416/20" (the first number being the bid, the second the
offer)
Example: "At 1.2416,
I sell 5 lots of Euro/Dollar,"
or
"At 1.2420, I buy 5 lots of Euro/Dollar"
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If you do not
wish to deal at the quoted levels, simply say "Nothing Done",
hang up and call again later. Or, place a limit or stop order
at your desired level.
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Remember: A
price given is the dealing price at that time; haggling is not
allowed nor are Traders allowed to remain on the phone until
the price changes.
-
It is
important to remember that Dealing Desk phone lines are
reserved for dealing/order purposes only, and that proper
Phone Dealing Procedures be observed at all times.
Order Types
The dealing platform provides sophisticated order entry and
tracking. Orders may be entered at any rate - inside or outside
the existing spread - using the following order types:
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Limit
orders
An order with restrictions on the maximum price to be paid or
the minimum price to be received.
If a trader is long USD/CHF at 1.4627, a limit order would be
entered to sell dollars above that price, for example, at
1.4800.
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Stop Loss
orders
Order type whereby an open position is automatically
liquidated at a specific price. Often used to minimize
exposure to losses if the market moves against an investor's
position.
If the trader above is long USD at 1.4627, a stop loss order
could be left at 1.4549, in case the dollar depreciates below
1.4549.
As a rule, sell stops are filled on our bid, and buy stops are
filled on our offer. This allows us to fill client stop orders
at the rate they requested in almost every case. In the rare
instance that the market gaps over a requested rate, the stop
is filled at the best available price. This is an important
point for traders who are accustomed to being filled on sell
stops when the offer reaches the requested order rate. For
example, if a stop order is placed to sell USD/CHF at 1.4549,
the trader will be filled when the bid reaches 1.4549 (i.e.
the bid/offer is 1.4549/54).
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One Cancels
Other orders (OCO's)
A contingent order providing that one part of the order is
cancelled if the other part is executed. This is a
particularly useful order type in that it allows traders to
execute specific trading strategies based on technical
analysis - without having to watch the market tick by tick.
As above, with the trader long USD/CHF at 1.4627, a typical
OCO order would be a stop loss at 1.4562 and a limit (take
profit) at 1.4700. If one part of the order is filled, the
other is automatically cancelled.
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If / Then
Single
A conditional order providing that if the first order ("If"
order) is executed, the second order ("Then" order) is
activated as a live, single order.
In cases where the If order does not execute, the Then single
order will remain dormant. When either part of an If / Then
order is cancelled, all parts of the order are cancelled as
well.
An example of an If / Then single order would be to first
place an 'If' limit order to buy EUR/USD at 1.0690, fifty
points below the current market rate of 1.0740. The 'Then'
part of the order would be a limit sell order to take profit
at 1.0770 (eighty pips above the 'If' order execution rate of
1.0690). If the market dips to 1.0690 the 'If' order will
execute and the 'Then' leg of the order will become active.
Note: the 'Then' order could also have been a stop loss order
at 1.0650 (forty pips below the execution rate of 1.0690).
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If /Then OCO
A conditional order providing that if the first order ("If"
order) is executed, the second order ("Then" order) is
activated as a live, One Cancels Other (OCO) order. The
execution of either one of the two 'Then' orders automatically
cancels the other.
In cases where the 'If' single order does not execute, the
'Then' OCO order will remain dormant. When any part of an If /
Then OCO order is cancelled, including either leg of the OCO
order, all parts of the order are cancelled as well.
An example of an If / Then OCO order would be to first place
an 'If' limit order to buy USD/JPY at 118.80, fifty points
below the current market rate of 119.30. The 'Then' part of
the order would be an OCO order: one leg of the OCO could be a
limit sell order to take profit at 119.60, (eighty pips above
the execution rate of 118.80) the other leg a stop loss order
to sell at 118.50 (thirty points below the execution rate). If
the market reaches 118.80, the 'If' single order is executed,
and the 'Then' OCO order is activated. If activated, the
execution of either leg of the 'Then' OCO order automatically
cancels the other.
All of the above
orders may be entered as Day Orders, entered today and good
until end of business day (1700 ET). Or, clients may choose
to may enter a Good 'til Cancelled Order (GTC), which is valid
until the order is executed or cancelled. Orders remain open
until they are triggered or cancelled. If you close out a
position manually, you must cancel any order's) relating to that
position.
Order Execution
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First In
First Out (FIFO)
Open positions are closed according to the FIFO accounting
rule. All positions opened within a particular currency pair
are liquidated in the order in which they were originally
opened.
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Stop Loss
Orders
As a rule, sell stops are filled on our bid and buy stops are
filled on our offer. This is an important point for traders
who are accustomed to being filled on sell stops when the
offer reaches the requested order rate. For example, if a stop
order is placed to sell USD/CHF at 1.4549, the trader will be
filled when the bid reaches 1.4549. In the rare instance the
market gaps over a requested rate, a stop order is filled at
the best available price.
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Limit
Orders
Sell limit orders are filled when the bid reaches the
requested rate; limit orders to buy are filled on the offer.
For example, a limit order to buy EUR/USD at 1.0456 will be
filled when our offer hits 1.0456.
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Good Till
Cancelled (GTC) Orders
All GTC orders remain open until they are triggered or
cancelled. If you close out a position manually, you must
cancel any order's) relating to that position.
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Orders left
over the weekend or holidays
Orders left pending at close of trading on Friday at 1630 ET
or placed over the weekend are subject to a gap open on Sunday
evening when trading starts at 1700 ET. For both stop loss and
limit orders - if your order is triggered due to news, events
or other fundamental factors, it will not be executed over the
weekend. Your order WILL be executed at the prevailing price
when the trading desk opens Sunday. Because of the additional
gap risk involved, you may want to reconsider leaving open
orders over the weekend or holidays.
Margin
The maximum available margin is 1% (100x leverage) for mini
accounts and 1% (100x leverage) for standard accounts. Traders
always have the option of employing a lower degree of leverage.
The minimum margin requirement is approximately $100 per lot in a
mini account and approximately $1000 per lot in a standard
account. The requirements for leverage may vary with account
size or market conditions, and may be changed from time to time
at the sole discretion of the firm.
If maximum leverage is employed, traders must maintain the
minimum margin requirement on their open positions at all times.
It is the customer's responsibility to monitor his/her margin
account balance. The firm has the right to liquidate any or all
open positions whenever a trader's minimum margin requirement is
not maintained. This is an important risk management feature
designed to strictly limit trading losses in your account.
It should be
noted that increasing leverage increases risk.
Margin Example:
USD Based Currency
Pair:
Margin = (Contract size / Leverage)
You have $500 in a mini account. To calculate the margin
required to execute 2 mini lots of USD/JPY (20,000 USD) at 100x
leverage, simply divide the deal size by the leverage amount
e.g. (20,000 / 100 = 200). You post $200 margin for this trade,
leaving a $300 balance in your account. Of course the balance
changes as the trade goes for or against your position.
Increases leverage increases risk.
Non-USD Based
Currency Pair
Margin = [(Contract Size x Price) / Leverage]
In this example, you have $5,000 in a standard account. You want
to execute 3 lots of EUR/USD (300,000 Euros) at the current
market price of 1.2710 using 100x leverage. To calculate the
required margin for this position, multiply the deal size
(300,000) by the price (1.2710) and then divide by the leverage
(100x), e.g. [(300,000*1.2710)/100] = $3,813. After you executed
this trade, you would have a $1,187 balance in your account.
The trading platform automatically calculates margin
requirements and checks available funds before allowing you to
successfully enter a new position. If you do not have adequate
funds available to enter a new position, you will receive an
"insufficient margin funds" message when attempting to deal.
If the unrealized P&L of your net total open position falls
below your account balance, your account is under margined and
all your open positions may be liquidated. To avoid
liquidation of your positions, do not use your entire account
balance as margin for open positions. Instead, leave enough
funds in your account to withstand a market movement against
your open positions. We suggest you always use stop loss orders
to limit your downside risk.
Please contact us if you wish at any time to use a lower degree
of leverage or otherwise adjust the margin settings in your
account.
Rollovers
A rollover is the simultaneous closing of an open position for
today's value date and the opening of the same position for the
next day's value date at a price reflecting the interest rate
differential between the two currencies.
Open positions are automatically rolled forward to the next
day's value date following the close of NY trading at 1700 ET.
Clients have the opportunity to earn interest on rollovers,
depending on the direction of their positions and interest rate
differential between the two currencies involved. For example,
UK interest rates are significantly higher than Japan's, so if a
trader is long GBP/JPY (i.e. holding British Pounds), they will
earn interest on the roll. Conversely, if a trader is short GBP/JPY
(i.e. holding yen) they will pay interest on the rollover.
The spot forex market is traded on a two-day value date. For
example, for trades executed on Monday, the value date is
Wednesday. However, if a position is opened on Monday and held
overnight (remains open after 1700 ET), the value date is now
Thursday. The exception is a position opened and held overnight
on Wednesday. The normal value date would be Saturday; because
banks are closed on Saturday the value date is actually the
following Monday. Due to the weekend, positions held overnight
on Wednesday incur or earn an extra two days of interest. Trades
with a value date that falls on a holiday will also incur or
earn additional interest.
Rollover credits or
debits are reflected in the unrealized P&L of the open position,
and a rollover report (available in the "Reports" tab of the
trading platform) provides additional detail of rollover
activity.
Daily Housekeeping
Daily Housekeeping will occur each evening at 1700ET and will
last approximately 5 minutes. During that time, back office
staff will conduct daily rolls and important system maintenance
tasks will be performed. Online trading MAY be unavailable, but
we will accept phone orders.
Confirmations
Deals are confirmed on screen, typically within one second. Full
transaction details may be accessed on screen as well, including
date, time, rate, notional amount bought and sold, USD value,
and reference number.
Reporting
The dealing software tracks all trading activity in real time,
allowing clients to view current open positions, real-time
profit and loss, margin availability, account balances, and all
historical transaction details directly on-screen.
In addition, by clicking on the
'reports' tab on the menu bar, clients may access five ad hoc
reports:
Account Value
Summary - an online
monthly account statement. View current account balance
(realized P&L) for a selected month, as well as all deposits,
withdrawals, interest earned, and fees charged (if any).
Detailed
Transaction Listing -
lists complete trade detail for any selected date range,
including deal date, currency pair dealt, trade direction (buy
or sell), contract size for both currencies in the pair dealt,
and executed deal rate.
Open FX Positions
- a summary view of all open positions, including contract size,
USD value, average rate of open positions, reval rate (current
market rate), and unrealized P&L. This report supplements
real-time position information available in the position
management screen of the trading platform.
Order History
- provides detail on all order activity for a selected data
range, including order entry date and time stamp, listing of all
cancelled and/or executed orders, along with its reference
number. The Log Entry column provides a confirmation number and
action detail for any order.
Rollover History
- provides rollover details for any transaction held open past
1700 EST, including rollover rate and USD value. May be
generated for any given date range.
Note: All reports can be printed
and/or exported into Microsoft Excel via a simple cut and paste.
Account Statements
Customer account statements are provided online in the Reports
section of the trading platform. Customers have access to a full
suite of available reports, including account value summary,
detailed transaction listing, open positions, etc. Reports may
be generated for any date range, and printed or saved for future
reference.
Funding Your Account
There are four easy ways to fund your account.
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Wire Transfer -
The fastest way to fund your account
Funds sent via wire are typically received within 1-2 business
days, and credited to client's account the day of receipt. All
wire transfers should include the client's name and account
number in the reference section of the wire.
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Personal or
Business Cheque
Funds sent via personal or business cheque take 5-10 business
days (from date of receipt) to clear and be credited to
client's trading account, according to our banking partner's
posted schedule. This can vary depending on the bank and state
of issue. International checks may take several weeks to
clear.
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Credit Card*
Deposits via Visa and MasterCard are accepted.
Please click here to start the credit card deposit process.
*All card-based transactions are automatically converted to US
Dollars; you may incur additional fees by your card issuer for
currency conversion.
Max Deal and Margin re-visited
Have you looked at the “Max Deal”
link under the Margin Balance? It represents your current buying
power (in lots) based on your existing margin balance and taking
into consideration your open positions. This calculation is done
for you here.
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