Forex FAQ

Clearing Firms

What is the relationship between Index ProTrader Services and the clearing firm?
What are your commissions and fees?
What are the trading hours?
Will my funds on deposit be safe?
Can I trade online if I am not using my main computer?
What other services does the clearing firm offer?
What are the clearing firm’s margin requirements?
Can I place orders over the phone?
Can I place a trade via e-mail?

Account Information

My account will be held on the books of which firm?
What's the difference between a demo and live trading account?
How much money do I need to open an account?
How do I open an account with Gain Capital Group (FOREX.com)?
What is the best way to send new account paperwork?
How do I know if my account has been opened?
How do I fund my account?
When will my funds be posted to my account?
What happens to my open positions at the end of the trading day?
How do I withdraw money from my account?

Trading Platform

How do I clear the cache for Internet Explorer?
What operating systems are supported by the FOREXTrader platform?
What are the system requirements for accessing FOREXTrader?
How do I clear my JAR cache?
How do I download the software required for the FOREXTrader platform?
How do I log into the FOREXTrader platform?
I can't see rates in the FOREXTrader platform?

Forex Market

What is Foreign Exchange?
Where is the central location of the FX Market?
Who are the participants in the FX Market?
When is the FX market open for trading?
What are the most commonly traded currencies in the FX markets?
Is Forex trading expensive?
What is Margin?
What does it mean to have a 'long' or 'short' position?
What about terms like "bid/ask", "spread", and "rollover"?
What is the difference between an "intraday" and "overnight position"?
How are currency prices determined?
How do I manage risk?
What kind of trading strategy should I use?
How often can trades be made?
How long are positions maintained?

About the Clearing Firms

What is the relationship between Index ProTrader Services and the clearing firm?
Index Pro Trader Services provides information and access for individual investors to the services provided by the clearing firms (Forex.com and Gain Capital). Index is an Introducing Broker and is compensated for these services directly from the clearing firms.

What are your commissions and fees?
The clearing firms (Forex.com and Gain Capital) do not charge commissions. They are compensated for their service by having the opportunity of profit through the bid/ask spread. As the market-maker, they profit by taking on the risks and functions of a foreign exchange dealer. They have the very significant responsibilities of providing a liquid marketplace, with streaming-prices and consistent spreads, to individual investors who cannot gain access to the inter-bank FX market where major financial institutions conduct cross-border commerce and investment activity. But because of the huge volume of trading activity they transact in the inter-bank markets as a result of their large customer business, they are able to offset their market-making risks directly with the largest liquidity providers in the inter-bank markets. This enables them to, on average, earn dealing profits from their customer trading activity.

To the extent a broker, whether Index or any of its affiliates or agents, provides ‘value-added’ services to investors which are not otherwise available, a fee may be charged. If any fee is charged for any product or service, it will be clearly disclosed and acknowledged in the account opening process.

What are the trading hours?
The clearing firms provide market-making services 24 hours daily from 5:00pm EST Sundays through 4:30pm EST on Fridays, including most U.S. Holidays. This is primarily an on-line marketplace but traders are always available by phone in case of emergency.

Will my funds on deposit be safe?
Index ProTrader Services realizes that safety of funds is a major concern for investors. As a result, we will only introduce our clients to firms who are subject to the regulations and oversight of appropriate government and government-appointed agencies. In the United States, forex clearing firms must be registered with the Commodity Futures Trading Commission (CFTC) as a Futures Commission Merchant (FCM). They must also be a member of the National Futures Association (NFA) – the regulatory agency whose mandate is to ensure its members’ compliance with CFTC rules and regulations.

FOREX.com is a division of GAIN Capital Group (Gain). GAIN is a registered FCM with the CFTC and is a Forex Dealer Member (FDM) of the NFA. As a registered FCM (NFA Member ID #0339826), GAIN must comply with the CFTC’s standards of business practices and is subject to strict financial requirements and reporting. All FDMs must adhere to Minimum Net Capital requirements based on their customers’ open positions. GAIN reports its financial information to the CFTC and the NFA on a weekly and monthly basis, and is subject to audit by the NFA at any time, but no less than annually. GAIN's operating and risk management procedures as well as financial statements are audited by the Big Four accounting firm, Deloitte

GAIN also holds supplemental insurance policies to protect itself against failure of service, dishonesty, forgery, alteration etc. A Financial Institution Bond is held through the National Union Fire Insurance Company and the Bankers Professional Liability policy is held through Lexington Insurance Company (both member companies of American International Group). This type of insurance coverage is intended to help insure the continued solvency of the policy holder.

Transactions entered into with Gain are not traded on an exchange. Accordingly, an FDM has no formal regulatory procedure to follow for the segregation of customer funds. This means that, even if the FDM maintains separate bank accounts for its customer funds from its own operating funds, customers may still be at risk if the firm becomes insolvent. Forex funds deposited with a FDM are not given special protection under the bankruptcy laws.

Can I trade online if I am not using my main computer?
You may trade using FOREXTrader from any computer with an Internet connection. Simply go to www.indexfx.com and login to your account. If you are traveling or do not have access to a computer with an Internet connection, you may execute trades over the phone by calling the Gain Capital dealing desk.

What other services does the clearing firm offer?
The FOREXTrader dealing software provides each client with a wide range of trading tools, including technical analysis and charting, real-time news feeds, real-time profit and loss analysis, and full back office capabilities. The Gain Capital market professionals also provide daily FX commentary. Account statements are sent at the beginning of each month, and list all transactions for the previous month by currency and value date, a summary of all current open positions, and account balance as calculated at the close of business on the last business day of the month.

What are the clearing firm’s margin requirements?
The initial requirement to open a standard account is US $2,500 on our minimum trade size of US $100,000.
The initial requirement to open a mini account is US $250 on our minimum trade size of US $10,000.
The margin required to maintain any position is generally set at 1% of the USD value of the position but can be set higher by request.

The clearing firm will only execute trades on margin if the client has sufficient funds in his or her account.

Can I place orders over the phone?
If you are traveling or do not have access to a computer with an Internet connection, you may execute trades over the phone with a Gain Capital Group dealer. Dealing desk phone numbers are provided to “Live” clients only. Clients can trade over the telephone 24 hours a day from Sunday 1700 ET through Friday 1630 ET. When trading via phone, the Gain dealers will quote the same tight spreads available via the dealing platform. Please refer to the Trading Handbook for Phone Dealing Procedures.

Can I place a trade via e-mail?
No. The clearing firms do not accept trades via email. You may place a trade online or by calling the dealing desk.

Account Information

My account will be held on the books of which firm?
Index ProTrader Services is a registered Introducing Broker under the guidelines and regulations of the CFTC and the NFA. With this license, we do not hold customer funds and are not the counter-party to any trading activity. We work with certain clearing firms and foreign exchange dealers who serve those functions. Your account will be held with Gain Capital Group, LLC (who also does business as Forex.com), is regulated by the Commodity Futures Trading Commission and is a member of the National Futures Association (NFA). Gain is a registered Futures Commission Merchant with NFA ID #0339826.

What's the difference between a demo and live trading account?
The only difference is that there is no capital at risk when trading on the demo system. The FOREXTrader demo system is fully functional and, more importantly, the bid/ask rates available in the demo system are the EXACT rates available to our live trading clients. The demo allows you to see firsthand the consistent dealing spreads and sample the ability to deal instantly from live, streaming quotes.

How much money do I need to open an account?
The minimum deposit to open a standard account is US$2,500. The minimum transaction size for a standard account is US$100,000 (or the equivalent).
The minimum deposit to open a mini account is US$250. The minimum transaction size for a mini account is US$10,000 (or the equivalent).

How do I open an account with Gain Capital Group, LLC. (FOREX.com)?
Opening an account is easy. Simply complete the following three steps.

1. Complete Application
You can apply online from our website or download the account forms, also provided on our website.

2. Provide Photo ID
The appropriate photo identification in order for us to verify your personal information is:

• U.S. Residents: No additional documentation is required at this time.
• Non U.S. Residents: Two (2) forms of identification, including one (1) photo ID and one (1) proof of address as represented on this application (i.e. utility bill, drivers license, bank statement, etc.)

Non US Residents must also complete a W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding Form.

Any new account paperwork not filled out onliine may be faxed, emailed or mailed to us at:

Fax: 312-341-9196
Email: newaccounts@indexfx.com
Mail:
Index ProTrader Services
Attn: New Accounts
141 W. Jackson Blvd.
Suite 3125
Chicago, IL 60604

3. Fund Your Account
Once your account is open, there are three convenient ways to fund your new trading account:

1. Credit and Debit Card
2. Wire Transfer
3. Personal or Business Check

What is the best way to send new account paperwork?
The fastest method to send new account paperwork is by fax or email. New documents should be faxed to 312-341-9196 or e-mailed to newaccounts@indexfx.com. The quality of old fax machines often makes it difficult to read. If you do not have access to a high quality fax machine, scanning and then e-mailing the image is often times a simple solution. If you do not have access to either a fax machine or a scanner, documents can always be sent through the mail to:

Index ProTrader Services
Attn: New Accounts
141 W. Jackson Blvd.
Suite 3125
Chicago, IL 60604

How do I know if my account has been opened?
Once your account is opened, the clearing firm will send you an email with your username, password and instructions for accessing your account. Please note that usernames are only assigned after your account paperwork has been approved.

How do I fund my account?
There are four easy ways to fund your account:

Credit Card - The fastest way to fund your account
Bank or Cashier's Check
Personal or Business Check
Wire Transfer

For more information on funding your account, click here.

Please make all checks payable to FOREX.com.

Bank or Cashier's Check
Once received, Bank or Cashiers Checks are typically credited to client's account within one (1) business day.

Personal or Business Check
Funds sent via personal or business check take 5-10 business days (from date of receipt) to clear and be credited to client's trading account, according to our banking partner's posted schedule. This can vary depending on the bank and state of issue.

Mail checks directly to:

FOREX.com
550 Hills Drive
Bedminster, NJ 07921

When will my funds be posted to my account?
The time it takes for a deposit to post to your account will depend on the method in which it is sent:

Personal Checks - 5 to 7 business days
Cashiers/Bank Checks - 1 business day after receipt
Wire - 1 to 2 business days
Credit Card - within 24 hours of receipt
Foreign Checks/Wires - within 24 hours of receipt

What happens to my open positions at the end of the trading day?
The clearing firm will automatically roll forward all open positions to the next day's value date at the end of each business day - 5:00 pm ET. All rolls will be done at competitive rollover rates, and depending on the currency pairs involved, trades will be executed where the trader will either earn or pay away points, depending on the interest rate differential between the two currencies and the margin employed on the trade.
For details see the Trading Handbook.

How do I withdraw money from my account?
click here to request a withdrawal.
Withdrawal requests are processed within two (2) business days of receipt.

Trading Platform

How do I clear the cache for Internet Explorer?
1. Exit out of the browser by closing all open Internet Explorer windows.
2. Click on "Start", then click on "Settings" (Windows 98/2000), then "Control Panel."
3. Click "Internet Options."
4. In the general tab section, click on "Delete Files" then "OK."
5. Then click "OK" to close the settings box.

What operating systems are supported by the FOREXTrader platform?
Windows: 95OSR2, 98, ME, NT, 2000, and XP are all supported.
Macintosh: OS X (10.1 or higher)

What are the system requirements for accessing FOREXTrader?

Windows:

• Internet Explorer v5.x or higher, Firefox v1.x
• Jave Runtime Environment v1.4.2_08 or higher
• Processing speed of 1Ghz or higher
• Monitor resolution set at 1024x768 or higher
• Windows 98/2000/XP
• 256MB of RAM

*AOL users: AOL users can connect to the Internet with AOL, but must use Internet Explorer v5.0 or higher to access FOREX.com's trading system.

Macintosh:

• Safari
• Processing speed of PowerPC G4 500 Mhz or higher
• Monitor resolution set at 1024x768 or higher
• OS X (10.1 or greater)
• 256MB of RAM

• 56Kbps or higher

How do I clear the JAR Cache?

1. Click on the Start Button
2. Click on Settings (Windows 98/2000 Only)
3. Click on Control Panel
4. Click on the Java Plugin Icon
5. Click on the "Cache" tab, then click on "Clear Cache."
6. Hit "OK", then close out the window and the control panel.

How do I download the software required for the FOREXTrader platform?
The Java Runtime Environment is the required software for the FOREXTrader platform.
Downloading the FOREXTrader Java version is easy and can be completed in three easy steps.

Step 1:
Download the Java Runtime Environment

Step 2:
Follow the online instructions - selecting 'Run the program from its current location' - and then selecting 'Next' until the process is finished.
For step-by-step installation directions, use this guide.

Step 3:
Once you have successfully installed the Java Runtime Environment, go to http://www.forex.com/login.html to log into the trading platform. You will be asked to select Demo or Live trading platform. Once you enter your User ID and Password, the FOREXTrader platform will automatically load.

The download bundle includes the Java 2 Runtime Environment with Java Plug-in software. If these components are already installed, Internet Explorer will automatically load the platform necessary to run the FOREXTrader software. Load time for the platform on a 56k modem is approximately 1 minute.

Once you have installed the plug-in and platform you will not be required to do so again.

If you do not have 'Java 2 Runtime Environment Standard Edition v1.4.2_12' installed, Internet Explorer will prompt you to install it. If Internet Explorer does not automatically prompt you to install these components, you may install the files directly at java.sun.com. Load time is approx. 15 min. on a 56K connection.

How do I log into the FOREXTrader platform?
If you have a Practice account, the link to the login page is: http://demo.efxnow.com/copy_demo
If you have a LIVE account, the link to the login page is: http://www.forex.com/login.html

I can't see rates in the FOREXTrader platform?
If you see no rates at the top of the trading platform, you have a firewall that restricts traffic over certain ports.

Personal PC Users: If you have a firewall installed on your computer, it may be restricting traffic necessary for the platform to operate correctly. Firewalls may cause connectivity issues, affect access to the live rates, and charting on the platform. If a firewall is installed, you will need to modify it to allow traffic on the following ports with a TCP protocol:

1000, 1999, 3020

(Click here if you need destination addresses and protocols)

Click on your firewall for instructions:

Norton Internet Security / Norton Personal Firewall
ZoneAlarm
McAfee Personal Firewall
Windows Firewall

NOTE: Adobe Acrobat required to view instructions.

Corporate Users: Most corporate users access the internet through a firewall. This is most likely the reason you cannot see rates. Contact your network administrator if you wish to access our trading software via your corporate network.

Please note: we do not support operation behind a proxy at this time.

Forex Market

What is Foreign Exchange?
The Foreign Exchange market, also referred to as the "Forex" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.9 trillion1. Foreign Exchange is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate system and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.

Where is the central location of the FX Market?
FX Trading is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over the Counter (OTC) market due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. The market’s liquidity is dictated by the 'Inter-bank' market, which is made up of the world’s largest banks and dealers who trade among themselves and make markets to their institutional and financial customers.

Who are the participants in the FX Market?
Foreign exchange trading has traditionally been dominated by Inter-bank participants 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.

When is the FX market open for trading?
A true 24-hour market, Forex trading begins each day in Australia/New Zealand, and moves around the globe as the business day begins in each financial center, first to Tokyo, then London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

What are the most commonly traded currencies in the FX markets?
The most often traded or 'liquid' currencies are those of countries with stable governments, respected central banks, and low inflation. Today, over 85% of all daily transactions involve trading of the major currencies, which include the US Dollar (USD) , Japanese Yen (JPY) , Euro (EUR) , British Pound (GBP), Swiss Franc (CHF) , Canadian Dollar (CAD) and the Australian Dollar (AUD).

Is Forex trading expensive?
No. FOREX.com requires a minimum deposit of $250. Leverage can be up to 200:1. This means that investors can execute trades of $10,000 with an initial margin requirement of $50. However, it is important to remember that while this type of leverage allows investors to maximize their profit potential, the potential for loss is equally great. A more pragmatic margin trade for someone new to the FX markets would be 20:1 but ultimately depends on the investor's appetite for risk.

What is Margin?
Margin is essentially collateral for a position. It allows traders to take on leveraged positions with a fraction of the account equity that would be necessary to fully fund the transaction. In the equity markets, the usual margin allowed is 50% which means an investor has double the buying power. In the forex market typical leverage ranges from 1% to 2%, giving investors the high leverage needed to trade actively.

What does it mean have a 'long' or 'short' position?
In trading parlance, a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. In this scenario, the investor benefits from a rising market. A short position is one in which the trader sells a currency in anticipation that it will depreciate. In this scenario, the investor benefits from a declining market. However, it is important to remember that every FX position requires an investor to go long in one currency and short the other.

What about terms like "bid/ask", "spread", and "rollover"?
This website contains an extensive Glossary that provides detailed definitions of all Forex related terms. Click here to go to the glossary.

What is the difference between an "intraday" and "overnight position"?
Intraday positions are all positions opened anytime during the 24 hour period AFTER 5pm New York time. Overnight positions are positions that are still on at the end of that 24-hour period, which are automatically rolled by the clearing firm at competitive rates (based on the currencies interest rate differentials) to the next day's price.

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.

How do I manage risk?
The most common risk management tools in FX trading are the limit order and the stop loss order. A limit order places restriction on the maximum price to be paid or the minimum price to be received. A stop loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against an investor's position. The liquidity of the Forex market ensures that limit orders and stop loss orders can be easily executed.

What kind of trading strategy should I use?
Currency traders make decisions using both technical factors and economic fundamentals. Technical traders use charts, trend lines, support and resistance levels, and numerous patterns and mathematical analyses to identify trading opportunities, whereas fundamentalists predict price movements by interpreting a wide variety of economic information, including news, government-issued indicators and reports, and even rumor. The most dramatic price movements however, occur when unexpected events happen. The event can range from a Central Bank raising domestic interest rates to the outcome of a political election or even an act of war. Nonetheless, more often it is the expectation of an event that drives the market rather than the event itself.

How often can trades be made?
Market conditions usually dictate trading activity on any given day. As a reference, the average small to medium trader might trade as often as 10 times a day, or as little as 1 or zero times a day.

How long are positions maintained?
Approximately 80% of all forex trades last seven days or less and more than 40% last fewer than two days. As a general rule, a position is kept open until one of the following occurs: 1) realization of sufficient profits from a position; 2) the specified stop-loss is triggered; 3) another position that has a better potential appears and you need these funds.

1 Bank for International Settlements: Triennial Central Bank Survey - Foreign Exchange and Derivatives Market Activity in 2004