Q. Is FX in a bear market now or heading for one?
A. There is no such thing as a bear market in FX. Every major corporation, export-importer and every government in the world needs foreign currency every day to pay their bills. There is always FX trading around the world (200 times the size of NYSE daily volume). As one currency goes down, another necessarily goes up. Anticipation is the challenge, serendipity being helpful as well.
Q. Are fortunes made and lost in FX and who trades on the FOREX market?
A. YES. Profit potential is enormous in the spot currency market. Potential losses can be capped by STOP-LOSS orders automatically executed by computerized dealing systems the moment price levels pre-set by the client are reached in a currency's fluctuation. Profits on the other hand can be left to run on and on. You can let the profits run and cut your losses short. Trading strategy, assisted by our consultants and traders on request, is entirely up to the client's free choice, being tailored to fit varying preferences of market participation, hedging, or risk tolerance level.
Q. How does FX trading differ from stocks on Wall Street?
A. FX trades are opened then closed typically within days, sometimes within hours or minutes. A margin of only 1% is required to initiate a Forex trade with our managed accounts as opposed to 50% margin required for trading stocks. $10,000 would enable you to buy or sell $1 million worth of any currency (including US dollar). When you sell a foreign currency against the dollar, you are buying the dollar equivalently in hopes that the dollar would rise in value and you can then cash in and close your position for a handsome profit.
Q. What are the currencies traded and where are they traded?
A. They are the world major currencies and also the global minor currencies of the developing countries traded each day by various central banks, the top commercial banks, as well as private speculators and traders around the world, making the Foreign Exchange market an enormous and liquid market. At all hours of the day it is possible to buy and sell in this market. Trades are conducted on the global Interbank systems which is a network of top banks. Dealers place their trades on the Interbank system.
Q. How do you read the prices quoted for these currencies?
A. The quote system is globally accepted and is always quoted this way in FOREX trading. They are different from Futures or Forwards quote styles. Some are quoted directly per currency unit value in US Dollar (Euro and Pound), others are quoted indirectly for dollar value per foreign currency unit (Swiss Franc and Yen).
Here are some examples:
Q. Are FX price movements random chance, and the market a gamble?
A. There are technical and fundamental factors affecting the value of a currency. Most currencies define their price relative to the US dollar. Micro price fluctuations are unavoidable and unpredictable. However there is nothing like a special FX-sensitive event to drive the market all one way -- like elections, interest-rate changes, publication of economic indicators, Fed Chairman Greenspan's speech. Anyone however humble who correctly forecasts the market can make sizeable profits. One day in October 1992, financier George Soros correctly judged the British pound was indefensibly overpriced. He fearlessly sold sterling against the dollar and made 2 billion dollars of profit within a few hours. The FOREX market is so immense no individual can manipulate prices, not even the central banks. But private individuals can correctly identify then anticipate price trends thus making large profits employing small leveraged capital, depositing only 1% margin upfront. Actual price movement of a currency is normally very small, so we give you 100 times leverage to make significant profit levels possible.
Q. Are profits guaranteed?
A. Only death and income tax are guaranteed, the market guarantees price movements up or down. Market investors always have freedom of choice, whether to stay in and ride a favourable market, or to cut their losses on adverse trades and live to fight another day.
Q. While buying and selling currency, how much spread would I pay?
A. Today at your local Bank Mr. Joe Public can buy sterling at 66 pence to the dollar, but he can only sell it back at 75 pence -- instantly losing 9 pence (900 points spread) to the bank. Your local bank takes the profit from trading on the FOREX market. But in the FOREX Interbank system, Mr. Joe Public can buy at 70.13 pence and sell at 70.18 pence with only a 5-point (0.05 pence) spread between bid and ask.
Q. What is the contract size of each trade and how do you calculate profits ?
A. The minimum size of a contract of the major currencies is the value of $100,000 USD (1% margin=$1000). But the value of each currency relative to the USD is different each minute, so the actual US dollar value fluctuates, and that's where you make your profit. The usual contract size is about 100,000 Euros, 62,500 pounds, 187,500 Swiss Francs, 12.5 million Yen, all with an initial margin of $1000 on deposit, making it the cheapest way to own large quantities of assets. For example, today Mr. and Mrs. Joe Public buy a FOREX contract of £62,500 at the exchange rate of $1.4225 (USD) per pound, while using for that purchase only US dollars of $1,000. Five hours later poor US economic indicators are released, the Fed lowers interest rates again, NYSE and NASDAQ both tumble, and the dollar falls 1.5 cent against the pound sterling. The price of the pound is now worth $1.4375. After discussion with their broker, Mr. and Mrs. Joe Public quickly decide to close their contract, taking $937 profit and almost 100% return of their initial investment of only $1000 in buying one contract of £62,500 five hours ago. $1000 will enable you to buy (or sell) one contract of any major currency, making FOREX the quickest way to make a profit.
Q. How can I learn about FX trading, can I dip a toe in the water by having some paper-trading practice first?
A. Yes, we give you Demo accounts on our state-of-the-art online trading platform. Paper trading is good practice for honing trading skills and acclimatising to market movements, but nothing concentrates the mind like having real money at stake. With our Demo accounts you can practice your trading skills before you open a live account with your hard-earned money on line. If after practising for a month you feel you can't trade full time yourself but still see the market potential for a fortune, we offer Managed Accounts on an incentive fee basis.
Q. What are the FOREX market hours and where are the market centers ?
A. The market is open 24 hours a day from Sunday night 19.00 (7 PM EST) to Friday 15.00 (3 PM EST) as traders and banks around the world do their trades on the global Interbank system. London is the world center of FOREX trading, followed by New York, Tokyo, Switzerland, Singapore, Hong Kong, Australia. See the global trade chart here.
Q. What about tax?
A. Each client has to consult his own country's tax code regarding taxes. As some trading is done offshore for some countries, taxes might not be due for some individuals or corporations.
Q. What is the minimum deposit I need to begin trading?
A. You can start trading in our regular Individual Account with a minimum deposit of $2,000, and with a Mini-account with as little as $500. Regular accounts trade in $100,000 lots, and Mini-accounts trade in $10,000 lots.
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Last update March 2, 2004 820