What is Forex

The forex (FX) market is the largest and most liquid financial market in the world with an estimated USD 5 trillion traded each day. It operates continuously, providing forex traders with 24-hour market access, but closes during weekends and applicable public holidays. Forex trading, also known as “foreign currency trading”, offers currency traders huge opportunities to benefit from fluctuations in the currency markets. This can be achieved by opening a forex margin trading account with us, and you can either go long or short on all currency pairs. But also we would like you to keep in mind that currency trading involves significant risk of loss. We suggest you first try your hands at forex investing via demo accounts, carry out your due diligence and choose a regulated reputable broker.

Some terminologies you should be familiar with

-Basic knowledge you should not skip

Currency pairs

In the forex market, all currencies are traded in pairs. The name of each pair comprises two currency abbreviations.

Example:

NZDUSD represents New Zealand dollar against US dollar

The "base" currency is the first currency in the pair. The "quote" currency, or "counter" currency is the second currency in the pair.

 “NZDUSD is currently trading at “0.8000” means

 1 NZD (base currency) is equal to 0.8000 USD(quote currency)

 Pip/Tick

 The minimum rate fluctuation is called a point, a pip or a tick.

 For currency pairs quoted with 4 decimal points, say

 NZDUSD, the minimum rate fluctuation is 0.0001

 For currency pairs quoted with 2 decimal points, say

 USDJPY, the minimum rate fluctuation is 0.01

 Hantec offers fractional pips, which is why on your trading platform you may see 5th or 3rd (for 2 decimal pairs) digits after the pip point (0.00001/0.001).

 Bid & Ask Rate

 On your trading platform, you will find the currency pairs are quote this way:

 

Bid

Ask

NZDUSD

0.8000

0.8001

Bid: the rate at which you SHORT/SELL the currency pair, in this case, it means you can short 1 NZD for 0.8000 USD

Ask: the rate at which you LONG/BUY the currency pair, in this case, it means 1 NZD costs you 0.8001 USD

Spreads and Currency Rates-

Spreads: The difference between the Bid and the Ask prices.

Currency rate: the value of one currency expressed in terms of another. The fluctuation rate depends on numerous factors including the supply and demand on the market and/or open market operations by a government or a central bank.

The spread and currency rates may vary subject to numerous factors, for instance, brokers, platforms, market volatility etc.

Lot:Contract size, 1 unit of currency pair contract is called 1 lot, which is usually 100,000 units of base currency.

Margin trading

Margin trading contains leverage, which enables investors to trade assets with a higher value than the capital held in their accounts by borrowing money from their broker. However, this does involve more risk and substantial losses are possible if the market moves against the trader’s position.

Example: To go long on NZDUSD for 1 lot

Non-margin trading:

You will need 100,000NZD equivalent US dollar, which is 80,010USD

Margin trading: (Assuming 1:100 leverage)

You only need 1000NZD equivalent US dollar, which is 800.1USD

Let’s put all these together

We assume NZDUSD is bullish

@ Entry

Bid

Ask

NZDUSD

0.8000

0.8001

@ Exit

Bid

Ask

NZDUSD

0.8011

0.8012

Scenario 1:

You Long/Buy 1 lot of NZDUSD

When you enter the trade, the ask price is applied, you want 100,000NZD which costs you 80,010USD

By the time you exit the trade, the bid price is applied, and you sell the 100,000NZD for 80,110USD

You earn

Initially you need to invest in

Percentage return

100 USD

Non-margin trading

80010USD

0.0125%

Margin trading(1:100)

800.1USD

1.25%

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Why Forex Trading is Popular with Investors

liquidity

Liquidity

Forex is the largest (in volume) financial market in the world, with the equivalent of USD 5 trillion traded daily. Such liquidity, especially in the major currency pairs of the foreign exchange markets, helps sustain price stability.

market research

Invaluable Research and Educational Tools

To support your strategy, we have a wide range of free resources for every client. These include detailed daily and weekly market insight reports, economic calendars and specialist opinions.

trade margin

Trade on Margin

Margin trading enables investors to hold assets with a higher notional value than the capital held in their accounts. However, this does involve more risk and substantial losses are possible if the market moves against the trader’s position.

risk management

Manage Your Risk

With forex trading, you have the ability to limit your exposure and manage your positions through a number of order types.

Flexibility

Forex is a 24x5 market – you can trade whenever you want, from anywhere in the world.

lower costs

Lower Transaction Costs

As a volume-based brokerage, our daily trading volume allows us to reduce the transaction costs associated with your trading.

1:200 Leverage

We offer leverage up to 1:200. Leverage can magnify gains, but can equally magnify losses. Therefore trading on margin must be managed responsibly.

Find out our trading rules:

   
Minimum lot of orders issued each time     0.01 lot
Maximum lot of orders issued each time
(includes position and limit/stop orders)
100 lots      
Contract size 1 lot = 100,000 base currency      
Spread floating spreads      
Commission Free
Overnight interest Clients may receive or pay overnight interest.
Please refer to the rates offered by interbank.      
Maximum leverage 1:200
Initial margin (per lot)     0.5% of opening position      
Margin closeout (per lot)     20% of initial margin    
Lock position (per lot)   30% of initial margin    
Trading hours (GMT) [1]    

Summer time:

Sunday 21:05 - Friday 20:55

 

Winter time:

Sunday 22:05 - Friday 21:55

 

[1]Trading hours may be adjusted due to holidays. If you would like our current trading hours, please contact us.

 

Note:

* The higher the leverage, the greater the potential profit opportunities, but also the greater the risk of loss. You are advised to carefully consider your investment objectives and risks and make an independent assessment, if necessary, with the advice of a professional investment adviser.

* If the net asset value of the customer's account is below the requirement for a mandatory liquidation margin and the company believes that the balance is not sufficient to withstand the associated market risk, Hantec Markets (New Zealand) Company Limited has the right (but no obligation) to unwind the client's contract without prior notice to secure the customer's loss.

*Margin requirements may be subject to market conditions. Please note our latest announcement.

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