Currency Dealing Handbook

The currency trading desk is open 24 hours a day from 19:00 ET Sunday through 16:30 ET on Friday.

24-hour trading is currently 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.

Currency Trading USA 's normal dealing spreads are 3-5 pips for the major currency pairs.

On the dealing platform, all trades are sized in units of 100,000 of the base currency, called "lots." The maximum deal size available online is 25 lots (2.5 million of the base currency). Trades over 2.5 million and up to 100 million may be executed over the phone with a trader.

Minimum transaction size is 1 lot, or 100,000 of the base currency, with a minimum margin deposit of 1%. For example, a US$100,000 position would require an initial margin deposit of US$1,000. A 100,000 EUR position will require a 1,000 Euro deposit.

Currency Trading USA's 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 software, and traders can at any time click on the current bid or offer and instantaneously execute a trade. Currency prices are updated automatically as market conditions dictate. On average, the currency traders make 100,000 prices per day. More importantly, we publish the same dealing price to the entire client base and allows any client to deal on the available price.

Executing an online forex trade 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 trading platform automatically calculates the initial margin requirement based upon the size of the deal, and if sufficient funds are available in your account, will accept the transaction. Trades are confirmed online, normally within one second, and the system instantaneously updates both your open position and calculates your current P&L.

Live clients may trade over the telephone with the foreign exchange desk 24 hours a day, from Sunday at 1900 ET through Friday at 1630 ET. 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.

The trading platform provides sophisticated order entry and tracking. Orders may be entered at any rate (inside or outside the existing spread) using the following orders types:

• Limit orders
  An order with restrictions on the maximum price to be paid or the minimum price to be received.
  For more information on limit orders, read "Types of orders in currency trading," in our free education section.

• 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.

  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 more information on stop orders, read "Types of orders in currency trading," in our free education section.

• One Cancels the 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.

  For more information on OCO orders, read "Types of orders in currency trading," in our free education section.

All orders can be entered as Day Orders [good until end of New York business day (1700 ET)]. Or, clients may enter a Good 'til Cancelled Order (GTC), which is valid until the order is executed or cancelled.

• First In First Out (FIFO)
  
  Open positions are closed according to the FIFO accounting rule. All positions opened are liquidated in the order in which they were originally opened.
  
  
• Stop Loss Orders
  
  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.

• Good Til 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 (unless it's a position order and it is cancelled automatically - for more information on position orders, go to our Currency Software Online Manual).
  
  
• Orders left over the weekend
  
  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 at 1900 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.
  

The initial margin requirement is 1%. The forex trading system performs an automatic pre-deal check for margin availability, and will only execute the trade is if the client has sufficient margin funds in his or her account.

Additional margin is required when a client's initial margin drops in value by 50% based on the value of any open positions. We reserve the right to liquidate any open positions should a client's initial margin drop by 75%. This is an important risk management strategy for both us and our clients; it ensures that clients do not lose more than their account balance. When trading, a client should learn how to protect his trading capital by not risking too much on any trade. We teach our customers how to do this in free training sessions as part of a trading strategy.

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.

All open positions are automatically rolled over to the next day's value date following the close of NY trading at 5:00 PM EST.

Customers have the opportunity to earn interest on rollovers, depending on the direction of their positions (long or short) and interest rate differential between the two currencies involved. For example, if U.S. interest rates are higher than Japan's, a trader that is long USD/JPY (i.e. holding dollars), will earn interest on the rollover. Conversely, if a trader is short USD/JPY (i.e. holding yen) he will pay interest on the rollover.

The spot currency market is traded on a 2-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 Thursday. The exception is a position opened and held overnight on Wednesday. The normal value date would be Saturday, but 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.

Forex deals are confirmed on the trading screen, typically within one second. Full transaction details may be accessed on screen as well, including date, time, rate, notional amount bought and sold, value in U.S. Dollars, and reference number.

Daily Housekeeping will occur each evening from 1700 to 1715 ET. During that time, important system maintenance tasks will be performed and back office staff will conduct daily rolls. Online trading MAY be unavailable, but phone orders are accepted.

Client funds maintained in a non-segregated account earn interest on deposited funds not used as posted margin. In addition, clients either earn or pay on overnight rollovers, depending on the direction of their positions. Open trades are rolled forward in the base currency of the position.

The trading 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.

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