Forex Trading is an important and legitimate business, done through world banks. There are some definite rules that govern the operation process of Forex Trading worldwide. These rules are provided to the traders via internet or telephone line. These rules and regulations give a detailed account on how to open, close trading positions, place, remove or change orders, and how these orders are executed by the Company on valid trading tools.
Trading in the Forex market mainly operates with the currencies of U.S. Dollar ($), European Currency Unit (€), Japanese Yen (¥), British Pound Sterling (£), Swiss Franc (Sf), Canadian Dollar (Can$), and the Australian and New Zealand Dollars as these countries have central banks, stable governments, and relatively low inflation rates. Trading of currencies is also done in pairs (i.e. USD/JPY or Dollar/Yen) on a floating exchange rate.
Forex operates 24 hours a day and has no official openings and closings like the stock market. Geopolitical events or press releases from key central bank officials or reports on the economy from government statistical bureaus, among other factors are what influences Forex trading. Though 5PM EST is stated as the end of daily session, the trading does not stop as there are people on the other part of the world engaged in Forex Trading. However Forex trading operates best during business hour as major chunk of buying and selling occurs amongst traders during this time. When an overlap occurs between the European/London session and the New York session, between 8 am and 11 am EST, the markets experience the highest volatility and volume as it coincides with important US economic releases.
An operation in Forex Trading begins with the execution of the deal at the BID price offered to the buyer by the seller. Once the buyer confirms the price the deal is closed, however if price changes at the time of execution of deal, the seller has the right to ask the client for the current prevalent price, which the buyer may select to opt for or reject.
Keep in mind the following operational facts about Forex Trading while engaging in it:
1. During rapid price movement if the price rises or falls in a particular trading session to such an extent the parties can suspend or restrict the trading. This may occur in the trading session start moments.
2. The traders have the right to increase the spread on any trading tool. In particular, spreads on basic currency pairs EUR/USD, USD/CHF, GBP/USD, USD/JPY can be increased under certain trading conditions up to 5 points.
3. The minimum level for placing SL, TP and Limit Orders from a market price on currency pairs is 10 points for currency pairs with spread less than 10 points, and is equaled spread - for currency pairs with spread more than 10 points. However the buyer has no right to change or remove SL, TP and Limit Orders if the price has reached the level of the order execution.
4. At Margin level less than 10 percent the Company has the right to begin closing positions starting from the least profitable, while at Margin level of 5 % or less all positions are closed forcedly automatically at current price.
5. The buyers takes responsibility for giving any orders for opening or closing positions, changing and removing orders via the phone line or internet through the operators of the Company. All operations in this case are executed at the responsibility of the buyer.
6. Charts in Metatrader 4 system display only BID price of a quote. Therefore, to get ASK price of the quote, it is necessary to add the spread. This moment is most important at orders execution.
7. If a trading account has an open position with a Stop Loss order and there is no free margin for opening another one, and at the same time a new postponed order was placed at the same price as Stop Loss (a so-called "stop with reverse" situation), so theoretically two orders (Stop Loss and postponed order) should be executed simultaneously.