What is premium?
The premium provides options trading in the Forex market. The premium is the price an investor pays the broker for the transaction
of the options open.
Paying a premium investor can benefit from the options until the maturity date, or sell it at any time before the expiration date.
Maturity date is the date of closing of the transaction.
What are the options transaction?
Currency options allow an investor to buy and sell at a specified price and time in the future. “Option” means that the investor can
choose – can choose the price at which he wants to buy or sell currency, and select the time of sale or purchase. The investor
makes these choices before purchasing options.
This option also means that the investor may choose whether to buy or sell when the appointed day arrives. It may also decide in
the course does not include the transaction.
Futures as an investment
Using futures as an investment can be risky. It is important that the investor understand the exact mechanisms of the market, before
investing. Everyone should know how much you could potentially lose and decide whether to take the risk.
Futures market is not suitable for all investors. Consider the purpose of their investments and to assess whether the futures market
is right.
If an investor decides that it has resources that can reasonably invest and invest, you should consider whether the advice to use a
broker, or make their own decisions about investments.
You should compare different methods of trading and choose the best for themselves. When an investor decides to invest, should
set some limits for their transactions. You are advised not to risk more than they are willing to lose.
What is a futures market?
The futures market is a very complex business. The market is not limited to financial instruments such as currencies. With the
futures transactions can be traded many other goods. Transactions in which they are good, are called commodity transactions.
Some investors, who benefit from the transactions, use the market to take a position opposite to the goods, which are the holders.
Taking the opposite position may reduce the risk of financial loss in the event of price changes. Addressing the opposite position in
order to reduce the risk of collateral is called the (hedging).
Other investors do not have the goods traded in futures transactions. A person buying a futures contract is hoping to profit from the
rising prices. A person selling a futures contract is hoping to gain from falling prices. Concluding contracts of purchase and sale if
the investor does not have a wealth of data actually is called speculation.
What is the deal term?
Forward transactions in the Forex market is the buying and selling a currency pair on a given day in the future at a price previously
agreed upon. Date of completion of the transaction is called the delivery date. On that day shall be the final statement and the
transaction is completed.
Sometimes the delivery date is called the value date.
Futures differ from transactions with options.
- At the transaction with the options investor may choose whether to buy or sell when the appointed day arrives. It may also decide
before the end of the transaction on its niezawieraniu.
- In the futures market, the investor has already agreed that conclude the transaction in the future. You can not withdraw.
Fundamental analysis
Fundamental analysis is a method of forecasting future price movements of financial instruments (eg currency) based on economic
statistics, political, environmental and other relevant factors. In practice, many market players use technical analysis in conjunction
with fundamental analysis to decide on the strategy of the transaction.One of the major advantages of technical analysis is that the
experts can observe a lot of markets and the use of several tools for the market, while fundamental analysis based on a precise
knowledge of the market. Fundamental analysis focuses onpredicting what should happen in the market, while technical analysis is
concerned with what actually happened. Factors taken into account when analyzing prices include supply and demand, seasonal
cycles and weather, and government policies.
Examines fundamentalist movements in the market, while the technician studies the effects. Fundamental analysis is a
macro strategic assessment of where should bethe currency transactions, based on all criteria except the price of currency
movements. These criteria often include the economic condition of the state that the currency represents, monetary policy and
other “fundamental” factors.
Many profitable trades are concluded in a few moments before or after a majoreconomic event.
What’s next?
What happens next depends on the investor’s transactions. Here is the example of a possible transaction:
The investor bought Forward transaction, buying 10 000 USD and selling EUR, chose the date 60 days from today at USD
exchange rate 1.0700 per euro. The investor runs the risk of EUR 200. Stop-Loss Rate is 1.0900.
Let’s see what happens when the transaction is completed at different rates:
Some time before the end of the transaction EUR / USD is 1.1000. In this case, the transaction has already been closed at 1.0900
Stop Loss course. The investor has lost 200 euros, the amount you risked.
The exchange rate EUR / USD is 1.0800 on the closing date. In this case the investor has lost EUR 100.
The exchange rate EUR / USD is 1.0200 on the closing date. The investor gained 500 per transaction!
Forward deals
Forward deals with forex is easy. Here are the steps to conclude the contract:
The choice of currency buying and selling currency – exchange rate appears automatically and is called the current market price.
Forward selection date (in future). Points will automatically appear Forward and Forward course.
Choosing the size of the transaction and the amount you want to risk. Appears Stop Loss price.
Check the “answers”, so that the investor finds out whether the account has sufficient resources to enter into this transaction.
You can stop the course of a few seconds, so you gain a few moments to consider whether to approve the transaction.
Pressing the “Accept” button opens a transaction.
The investor is satisfied as to the exchange rate for the day, who chose as completion of the transaction. Nothing can change that.
What is the difference between Forward contracts and futures?
The main difference between Forward contracts and futures is the way in which they are concluded.
Forward contracts are entered into at closing. Forward transactions are concluded at the end of each day. This is called the current
market valuation (mark to market).Daily changes are summarized at the end of each day, until the deal closes. If the exchange rate
changes have taken place resulting in the loss, the investor is asked to make a payment to cover them.
Terms of futures trading on the market are very strict.
Forward Contracts
What are forward contracts?
Forward contracts are transactions that are determined at a later date than usual.The most common type of transactions in the
Forex market transactions are a “spot market”. Transactions “spot market” is the most common form of transactions in the currency
market. Subject to buy or sell currencies, and the closing date is set for two days later.