FAQ
What is margin?
Margin is the
collateral required in order to trade. Margin allows an investor to put
up only a fraction of a CFD’s full value thus letting them control a
larger position with less capital.
Is CFD trading limited to certain hours?
Each market has its
own defined trading hours that generally coincide with specific exchange
hours. Often there are out of hours trading when assets trade in the
electronic market.
What is the liquidity like in CFDs?
Liquidity for CFDs is comparable to the underlying.
What are the penalties for not being able to meet a margin requirement?
If your total margin
exceeds the total equity you hold on deposit in your account. Some or all
of your opened positions will be closed automatically .
Are there expirations for CFDs?
No. A CFD contracts
aretreated like a cash product with no expiration. However, commodity
and fixed income CFDs could be impacted when contracts roll over.
Where do the prices for CFDs come from?
CFD prices are derived from the assets of the underlying instrument.
Who are the participants in the FX Market?
The Forex market is called
an 'Interbank' market due to the fact that historically it has been
dominated by banks, including central banks, commercial banks, and
investment banks. However, the percentage of other market participants
is rapidly growing, and now includes large multinational corporations,
global money managers, registered dealers, international money brokers,
futures and options traders, and private speculators.
How are currency prices determined?
Currency prices are affected by a
variety of economic and political conditions, most importantly interest
rates, inflation and political stability. Moreover, governments
sometimes participate in the Forex market to influence the value of
their currencies, either by flooding the market with their domestic
currency in an attempt to lower the price, or conversely buying in order
to raise the price. This is known as Central Bank intervention. Any of
these factors, as well as large market orders, can cause high volatility
in currency prices. However, the size and volume of the Forex market
makes it impossible for any one entity to "drive" the market for any
length of time.
What is the difference between an "intraday" and "overnight position"?
Intraday positions are all
positions which are opened and closed anytime during normal trading.
Overnight positions are positions that are still on at the end of normal
trading hours, which are usually rolled over by your Forex broker
(based on the currencies interest rate differentials) to the next day's
price.
What is Margin?
Margin is essentially collateral for a
position. It allows traders to take on leveraged positions with a
fraction of the equity necessary to fund the trade. In the equity
markets, the usual margin allowed is 50% which means an investor has
double the buying power. In the forex market leverage ranges from 1% to
2%, giving investors the high leverage needed to trade actively.