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Margin Forex
Sonray offer clients access to a wide range of currencies to trade Margin FX through our full advisory service or our award winning online platform. We have 24 a hour dealing desk to assist with execution.
Margin FX is an over-the-counter derivative product which enables traders to leverage a small margin deposit for a much greater market effect in relation to currencies.
A foreign exchange contract involves the exchange of one currency for another. Margin FX differs from spot and forward foreign exchange trading in that they are legally classified as derivatives rather than foreign exchange contracts, and are cash settled (i.e. no physical delivery is available).
Range of markets you can trade Margin FX
Margin FX contracts provided by Sonray are available in over 100 currencies. This means that all major currency pairs are available. However, some of the minor or more exotic currency pairs cannot be traded with Sonray. To find out what currency pairs are available, you should contact us.
Sonray Margin FX products do not result in the physical delivery of the currency but are cash adjusted or closed by the Client taking an offsetting opposite position i.e. there is not a physical exchange of one currency for another.
Margin FX products are derivatives, not foreign exchange contracts. Positions will always be closed and the client’s account will be either credited or debited according to the profit or loss of the trade.
Benefits of trading Margin FX
Margin FX products provide an important risk management tool for those who manage foreign currency exposures. The significant benefits of using Margin FX products as a risk management tool are to protect your exchange rate and provide cash flow certainty. Other benefits of using these products apply equally for a client as a risk management tool or for the client who is a trader or speculator and these are described below.
Leverage: An investor can gain leverage in a currency at up to 100:1. In order to trade with leverage, you need to lodge collateral. This is what is known as ‘margin’. The amount of margin needed depends on the amount of leverage used. If you use 100:1 leverage, then your margin needed would be 1%.
Hedging: Foreign exchange rate risk exposure is common to virtually all who conduct international business and/or trading. Buying and/or selling of goods or services denominated in foreign currencies can immediately expose you to foreign exchange rate risk. Margin FX allows you to hedge this currency risk.
Speculation: You can think of speculation as betting on the movement of a currency. If you believe a currency will appreciate in value against another you can speculate by buying that currency and selling the other currency short. i.e. I believe the Australian dollar will appreciate in relation to the American dollar so i purchase Australian dollars whilst selling American dollars.
Liquidity: The foreign exchange market is often described as the world’s most liquid financial market. Liquidity refers to the number of active traders and the overall volume of trading present at any given time.
Access to the foreign exchange markets at any time: When using Sonray you gain access to a highly advanced and multi-leveled system which provides you with the opportunity to trade 24 hours a day on any global market which is open for trading. This gives you a unique opportunity to react instantly to breaking news that is affecting the markets. It should be noted however, that trading in the various currency crosses may be restricted to hours where liquidity is available for any given currency cross.
How to trade Margin FX
Sonray provides an electronic trading platform which enables clients to trade in our products i.e. clients are provided direct access to currency rates over the internet.
When you trade margin FX products you are normally quoted a spot price. This means that if you take no further steps, your trade will be automatically rolled over after one Business Day unless you initiate an equal and opposite transaction to close the position. Alternatively, you may wish to swap the trade forward to a later date. This may be anywhere from a week up to several months depending on the time frame of the investment.
Although a forward trade is for a future date, the position can be closed out at anytime - the closing part of the position is then swapped forward to the same future value date.
When you trade, you may trade a combination of two currencies. For example, you will buy US dollars and sell Euro. Or buy Euro and sell Japanese yen, or any other combination of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening and one of them weakening.
When trading US dollars against Japanese yen, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD1,000,000. When closing the position, the opposite trade is done, again USD1,000,000. The profit or loss will be apparent in the change of the amount of yen credited and debited for the two transactions. In other words, your profit or loss will be denominated in Japanese yen that are known as the price currency. As part of our service, Sonray will automatically exchange your profits and losses into your Base currency if you require this.
This way of trading is different to the exchange traded derivative markets (futures markets), for example, where the Euro and yen are the fixed trade currencies, resulting in a US dollar denominated profit or loss. You can, however, also choose to trade in this reciprocal manner in foreign exchange markets but it is not the norm.
Further Education
Sonray offers free online education to help you trade with confidence.
Sonray offer clients access to a wide range of currencies to trade Margin FX through our full advisory service or our award winning online platform. We have 24 a hour dealing desk to assist with execution.
Margin FX is an over-the-counter derivative product which enables traders to leverage a small margin deposit for a much greater market effect in relation to currencies.
A foreign exchange contract involves the exchange of one currency for another. Margin FX differs from spot and forward foreign exchange trading in that they are legally classified as derivatives rather than foreign exchange contracts, and are cash settled (i.e. no physical delivery is available).
Range of markets you can trade Margin FX
Margin FX contracts provided by Sonray are available in over 100 currencies. This means that all major currency pairs are available. However, some of the minor or more exotic currency pairs cannot be traded with Sonray. To find out what currency pairs are available, you should contact us.
Sonray Margin FX products do not result in the physical delivery of the currency but are cash adjusted or closed by the Client taking an offsetting opposite position i.e. there is not a physical exchange of one currency for another.
Margin FX products are derivatives, not foreign exchange contracts. Positions will always be closed and the client’s account will be either credited or debited according to the profit or loss of the trade.
Benefits of trading Margin FX
Margin FX products provide an important risk management tool for those who manage foreign currency exposures. The significant benefits of using Margin FX products as a risk management tool are to protect your exchange rate and provide cash flow certainty. Other benefits of using these products apply equally for a client as a risk management tool or for the client who is a trader or speculator and these are described below.
Leverage: An investor can gain leverage in a currency at up to 100:1. In order to trade with leverage, you need to lodge collateral. This is what is known as ‘margin’. The amount of margin needed depends on the amount of leverage used. If you use 100:1 leverage, then your margin needed would be 1%.
Hedging: Foreign exchange rate risk exposure is common to virtually all who conduct international business and/or trading. Buying and/or selling of goods or services denominated in foreign currencies can immediately expose you to foreign exchange rate risk. Margin FX allows you to hedge this currency risk.
Speculation: You can think of speculation as betting on the movement of a currency. If you believe a currency will appreciate in value against another you can speculate by buying that currency and selling the other currency short. i.e. I believe the Australian dollar will appreciate in relation to the American dollar so i purchase Australian dollars whilst selling American dollars.
Liquidity: The foreign exchange market is often described as the world’s most liquid financial market. Liquidity refers to the number of active traders and the overall volume of trading present at any given time.
Access to the foreign exchange markets at any time: When using Sonray you gain access to a highly advanced and multi-leveled system which provides you with the opportunity to trade 24 hours a day on any global market which is open for trading. This gives you a unique opportunity to react instantly to breaking news that is affecting the markets. It should be noted however, that trading in the various currency crosses may be restricted to hours where liquidity is available for any given currency cross.
How to trade Margin FX
Sonray provides an electronic trading platform which enables clients to trade in our products i.e. clients are provided direct access to currency rates over the internet.
When you trade margin FX products you are normally quoted a spot price. This means that if you take no further steps, your trade will be automatically rolled over after one Business Day unless you initiate an equal and opposite transaction to close the position. Alternatively, you may wish to swap the trade forward to a later date. This may be anywhere from a week up to several months depending on the time frame of the investment.
Although a forward trade is for a future date, the position can be closed out at anytime - the closing part of the position is then swapped forward to the same future value date.
When you trade, you may trade a combination of two currencies. For example, you will buy US dollars and sell Euro. Or buy Euro and sell Japanese yen, or any other combination of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening and one of them weakening.
When trading US dollars against Japanese yen, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD1,000,000. When closing the position, the opposite trade is done, again USD1,000,000. The profit or loss will be apparent in the change of the amount of yen credited and debited for the two transactions. In other words, your profit or loss will be denominated in Japanese yen that are known as the price currency. As part of our service, Sonray will automatically exchange your profits and losses into your Base currency if you require this.
This way of trading is different to the exchange traded derivative markets (futures markets), for example, where the Euro and yen are the fixed trade currencies, resulting in a US dollar denominated profit or loss. You can, however, also choose to trade in this reciprocal manner in foreign exchange markets but it is not the norm.
Further Education
Sonray offers free online education to help you trade with confidence.
