The foreign exchange or the forex market is accepted as the most active and liquid financial markets in the world. Global daily forex turnover is estimated to be over $1.7 trillion.
The spot forex market is an over-the-counter market and is different from exchange-traded products because it has no physical location or central exchange. Foreign exchange trading takes place in the world major financial trading centers with the main centers being London, New York and Tokyo.
Trading hours are rarely restricted and prices are typically available in the major currency pairs almost without interruption during the working week. This liquidity and frequent volatility makes the trading of currencies an attractive investment opportunity for the experienced market participant. Forex trading has many investment benefits some of which are:
Liquidity - With over one trillion US dollars traded daily in the Forex market and with millions of participants and transactions daily, there is always the opportunity to enter and exit the market at transparent pricing.
24 hr trading - The market operates around the clock, from the Sydney market on Monday morning to the close of the US market on Friday creating a 24 hour market. One of the biggest advantages of trading forex is the opportunity to trade 24 hours a day. This enables traders to react and take advantage of market movements at all times.
Increase in leverage -Leveraged trading, also referred to as margin trading, allow investors in the Forex market to execute trades up to $100,000 with an initial margin of only $1,000.
Predictable market - The Forex market follows frequently repeated trends. Currency markets exhibit certain regularities, creating price trends for market participants to follow. These price trends increase the chances of trading profitably.
Lower transaction costs
Forex market is much more cost efficient to invest in terms of both commissions and transaction fees. In general, the width of the spread in a FX transaction is less than 1/10 as wide as a stock transaction.
Profit from all market movements - With forex, the market is continuously moving, so there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. Thus, a trader has the ability to profit on both short and long trading strategies.
(points * pip value * number of lots) - (67 * 10 * 2 = 1340 US$)
So the gross profit for the previous transaction is 1340 $.
A client believes that the EUR is due to rise in the future against US dollar, to get benefit of the situation the client intends to buy EURUSD. EURUSD is quoted at 1.3740 - 1.3743, the client buys 2 lots at 1.3743, the client requires minimum deposit of 1000 $ for each lot.
EURUSD prices rise to 1.3810 - 1.3813, the client is satisfied with his profit and wants to close his positions, he therefore sells 2 lots of EURUSD at 1.3810, so the client has made profit of 67 points (1.3810 - 1.3743 = 0.0067) . To calculate the profit we will do the following:
*Commission charges are NOT included in the above calculations
(points * Contract Size * one lot / Closing Price) - (42 * 100.000 * 1/112.95 = 371.84 US$)
(profit for one lot * Number of lots) - (371.84 * 4 = 1487.36$)
So the gross profit for the previous transaction is 1487.36 $.
A client believes that the JPY will weaken in the future against US dollar, to get benefit of the situation the client intends to buy USDJPY. (Buying USD & selling JPY)
USDJPY is quoted at 112.50- 112.53, the client buys 4 lots at 112.53, the client requires minimum deposit of 1000 $ for each lot.
USDJPY prices rise to 112.95- 112.98, the client is satisfied with his profit and wants to close his positions, he therefore sells 4 lots of USDJPY at 112.95, so the client has made profit of 42 points (112.95 - 112.53 = 0.42)
. To calculate the profit we will do the following:
*Commission charges are NOT included in the above calculations
Advantages Of Trading Forex
Why JMI Brokers LTD should be your preferred FX Broker?
Trade FX on tight spreads & low margins with 24 hour support
Why JMI Brokers ?
1. 24-hour online, telephone and Reuters trading
Access Interbank FX, spot gold and silver prices ensuring price integrity, transparency and consistent liquidity.
2.Transparent competitive two-way pricing
We offer very competitive spreads on over 80 currency pairs, typically 3 - 5 pip spreads on the major currency pairs.
3.Instantaneous auto trade executions
JMI Brokers Markets are committed to ensuring you deal on the prices you see. At a glance you can see where the market can be bought and sold (under normal market conditions).
4. Low FX margin requirements
Access FX, spot gold & silver with margin requirements that start at just 0.5% or leverage of
5.State-of-the-art FX trading platforms
Free easy-to-use Windows-based click and deal mini and maxi FX trading platforms which are fully customizable and offer multiple stored layouts. Our FX platforms offer a wide variety of order types - MARKET, LIMIT, STOP and OCO. JMI Brokers Markets aim to make it as easy and seamless as possible to access demonstration and live FX trading platforms and to open and fund your FX trading accounts.
6. Flexible lot sizes
You are not restricted to trading in standard lot sizes. Take advantage of our wide range of trading sizes from 0.01 million - 100 million
(equivalent to $1 / point - $10,000 / point).
7.Risk management in real time
Our platform monitors and controls risk exposure in real time. Based on your FX margin requirement, it calculates funds needed to retain current open positions and resources available for new positions or for adding to existing open positions.
You have complete control over whether you close or hedge your positions to reduce risk. You can run multiple positions for each currency pair which can be individually selected for closing.
9.Earn interest on cash balances
Unlike many FX brokers JMI Brokers pays interest on those funds not being used for margin purposes.
10.24 hour personalized customer service
Our experienced and knowledgeable people are available 24 hours a day to answer questions and provide assistance. Our professional dealers can be accessed at all times via live chat and telephone, and our technical and administrative support is second to none.
11.A fast and efficient back office system
When you fund your FX account and start trading, you receive straight-through-processing of your trades offering live position keeping, margining, statements, unrealized and realized profit & loss.
Advantages of FX Trading
Ability to trade on margin. Access to the FX market can be made using small capital outlays by taking advantage of superior leverage
The FX market is the largest and most liquid in the world
24 hour seamless trading. The FX market is open for a continual 5 1/2 day period allowing you to enter and exit the market at any time
Ability to establish long (opening purchase) and short (opening sale) positions
Superior market transparency. There are no multiple exchange listings of the same instrument
No standard trade sizes exist
No delivery or contract expiry to consider
Advantages of trading FX using technical analysis
Strong persistent trend
No directional bias
Advantages of trading FX using fundamental analysis
Global economic information readily available
Considerably less complicated than stock investing
FX Margin Trading and Leverage
Trade FX in a Lot Size that's right for you
Trade (or Lot) sizes start at 0.1 (a 10,000 unit trade or 10,000 base currency size) up to lot sizes of 1 (a 100,000 unit trade or 100,000 base currency size) per one lot.
Here are some examples of what this means:
U.S. Dollar/Japanese Yen (100,000 U.S. Dollars)
Euro/U.S. Dollar (100,000 Euros)
Euro/Great Britain Pound (100,000 Euros)
Euro/Japanese Yen (100,000 Euros)
Trading FX on Margin - 100 : 1
Put simply, margin serves as collateral to cover any losses that you might incur. Since nothing is actually being purchased or sold for delivery, the only requirement, and indeed the only real purpose for having funds in your FX account, is for sufficient margin.
Essentially when you trade on margin you are using a free short-term credit allowance from JMI Brokers LTD. This short-term credit allowance is used to purchase an amount of currency that greatly exceeds your account value. Let's take the following FX example:
You have an account with $10,000 with JMI. You trade ticket sizes of 1,000,000 GBP/USD. This equates to a margin ratio of 1% ($10,000 is 1% of $1,000,000). How can you trade 100 times the amount of money you have at your disposal? The answer is that JMIS temporarily gives you the necessary credit to make the transaction you are interested in making. Without margin, you would only be able to buy or sell tickets of $10,000 at a time. On standard accounts JMI Brokers applies a minimum 1% margin.
This margin facility allows you to potentially make large profits from a relatively small initial investment but it must be pointed out that any losses are equally multiplied.
Customers who hold FX positions may become liable to pay margin as detailed in our terms and conditions. All FX positions have an initial margin and you are required to keep this over and above any unrealized losses. Margin calls can be made at any time and it is therefore important for you to familiarize yourself with our terms and conditions especially the section relating to margin calls. Be aware that it is your responsibility, not JMIS, to monitor your positions and make any margin payments as they become due.
Monitoring Risk Exposure
Our FX trading platforms have been designed to effectively monitor and allow you to control risk exposure in real time. Based on each clients margin requirement, the FX trading platform system calculates both the funds needed to retain current open FX positions and the trading resources available for entering into new positions or for adding to existing open FX positions.
If the equity in your account drops below the margin required to maintain your open positions, we may close all open positions. Once usable margin reaches zero, a margin call will ensue, and all open positions may be closed by us. This limits your risk to usable margin.