The Foreign Exchange market (Forex, FX, or Currency Market) is a worldwide decentralized over-the-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends.
The purpose of the foreign exchange market is to assist international trade and investment. The foreign exchange market allows businesses to convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business’s income is in U.S. dollars.
In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.
The foreign exchange market is unique because of:
|1.||Trading volume resulting in market liquidity.|
|3.||Continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 UTC on Sunday until 22:00 UTC Friday.|
|4.||The variety of factors that affect exchange rates.|
|5.||Low margins of relative profit compared with other markets of fixed income.|
|6.||Use of leverage to enhance profit margins with respect to account size|
|FX Major||Spread||Contract Size||Limit & Stop Levels|
|EURUSD||3 pips||EUR 100,000||2 pips|
|USDJPY||3 pips||USD 100,000||3 pips|
|GBPUSD||3 pips||GBP 100,000||3 pips|
|AUDUSD||3 pips||AUD 100,000||3 pips|
|USDCHF||3 pips||USD 100,000||4 pips|
|USDCAD||3 pips||USD 100,000||4 pips|
|NZDUSD||3 pips||NZD 100,000||5 pips|
|FX Crosses||Spread||Contract Size||Limit & Stop Levels|
|AUDCHF||floating||AUD 100,000||6 pips|
|AUDJPY||4 pips||AUD 100,000||5 pips|
|CHFJPY||4 pips||CHF 100,000||4 pips|
|EURAUD||8 pips||EUR 100,000||10 pips|
|EURCHF||8 pips||EUR 100,000||3 pips|
|EURGBP||4 pips||EUR 100,000||2 pips|
|EURJPY||4 pips||EUR 100,000||3 pips|
|GBPAUD||8 pips||GBP 100,000||10 pips|
|GBPCAD||12 pips||GBP 100,000||10 pips|
|GBPCHF||7 pips||GBP 100,000||7 pips|
|GBPJPY||7 pips||GBP 100,000||7 pips|
Margin Requirements and Stop Out levels
For all forex pairs, margin taken for each 1 lot is equivalent to $250.
Forced liquidation will be enforced for all open positions whenever equity to margin requirement ratio reaches 10% or lower.
At Friday’s end of market session, all accounts under 100% ( equity to margin requirement ratio ) with open position will have it’s open positions liquidated by means of LIFO ( Last In First Out ) in order to fulfil a 100% ratio.
All open positions at each end of day time will be charged with a storage fee called swap. Consult your MT4 terminal to see the valid swap charges. 3-day swap will be charged at Wednesday’s end of day.