Forex Trader Trading Handbook

Currency Pairs
24-hour trading is available in 16 currency pairs: EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, EUR/JPY, EUR/GBP, EUR/CHF, GBP/JPY, AUD/JPY, CHF/JPY, EUR/AUD, GBP/CHF, NZD/USD, NZD/JPY.

Dealing Spread
Normal dealing spreads are 3-5 pips for the major currency pairs.

Trading Minimums

• Mini Accounts:
  Minimum transaction size for mini accounts is 1/10th standard sized lot, or 10,000 of the base currency, with a minimum margin deposit of 0.5% (200:1 leverage). For example, a US$10,000 position would require an initial margin deposit of US$50.
• Standard Accounts:
  Minimum transaction size for standard accounts is 1 lot, or 100,000 of the base currency, with a minimum margin deposit of 1% (100:1 leverage). For example, a US$100,000 position would require an initial margin deposit of US$1,000.

Fees
There are no commissions or fees for self-traders on the FOREXTrader platform regardless of account balance or trading activity. As a market maker, Gain Capital Group and/or its FOREX.com division is compensated for its services through the bid/ask spread. Likewise, Index ProTrader Services charges no commissions or fees for self-traders and is compensated by Gain for its introduction services. Fees may be charged for value-added products or services that are specifically subscribed to by the client.

Price Quotes
Through FOREXTrader, clients have the ability to execute trades directly from real time streaming bid/ask quotes. Live prices are continuously published to clients via the FOREXTrader platform, and traders can, at any time, click on the current bid or offer and instantly execute a trade. Prices are updated automatically as market conditions dictate. On average, FOREX.com clients make 100,000 prices per day. More importantly, the same dealing prices are quoted to the entire client base and any client can deal on the available price.

Trading over the Internet
Executing a deal on FOREXTrader via the Internet is a simple two-step process. Simply enter the number of lots and then click on the bid (if you want to sell) or offer (if you want to buy) for the currency pair you wish to trade - your deal is automatically executed. The dealing software automatically calculates the initial margin requirement based upon the notional amount of the deal, and if sufficient funds are available in your account, will accept the transaction. Deals are confirmed online, normally within one second, and the system instantaneously updates both your open position and calculates your current P&L.

Phone Trading
Live clients may trade over the telephone 24 hours a day, from Sunday at 1700 ET through Friday at 1630 ET. When trading via phone, the Gain Capital Group dealers will quote the same tight spreads available via the dealing platform. All trades executed via the phone are subject to a pre-deal margin availability check and will be manually entered into the customer's account for integrated P&L analysis and reporting. All telephone calls are recorded for the safety of both parties.

Order Types
The FOREXTrader platform provides sophisticated order entry and tracking. Orders may be entered at any rate - inside or outside the existing spread - using the following order types:

• Limit orders
  An order with restrictions on the maximum price to be paid or the minimum price to be received.

  If a trader is long USD/CHF at 1.4627, a limit order would be entered to sell dollars above that price, for example, at 1.4800.

• Stop Loss orders
  Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor's position.

  If the trader above is long USD at 1.4627, a stop loss order could be left at 1.4549, in case the dollar depreciates below 1.4549.

  As a rule, sell stops are filled on the bid, and buy stops are filled on the offer. This allows a client’s stop order to be filled at the requested rate in almost every case. In the rare instance that the market gaps over a requested rate, the stop is filled at the best available price. This is an important point for traders who are accustomed to being filled on sell stops when the offer reaches the requested order rate. For example, if a stop order is placed to sell USD/CHF at 1.4549, the trader will be filled when the bid reaches 1.4549 (i.e. the bid/offer is 1.4549/54).

• One Cancels Other orders (OCO's)
  A contingent order providing that one part of the order is cancelled if the other part is executed. This is a particularly useful order type in that it allows traders to execute specific trading strategies based on technical analysis - without having to watch the market tick by tick.

  As above, with the trader long USD/CHF at 1.4627, a typical OCO order would be a stop loss at 1.4562 and a limit (take profit) at 1.4700. If one part of the order is filled, the other is automatically cancelled.

• If / Then Single
  A conditional order providing that if the first order ("If" order) is executed, the second order ("Then" order) is activated as a live, single order.

  In cases where the If order does not execute, the Then single order will remain dormant. When either part of an If / Then order is cancelled, all parts of the order are cancelled as well.

  An example of an If / Then single order would be to first place an 'If' limit order to buy EUR/USD at 1.0690, fifty points below the current market rate of 1.0740. The 'Then' part of the order would be a limit sell order to take profit at 1.0770 (eighty pips above the 'If' order execution rate of 1.0690). If the market dips to 1.0690 the 'If' order will execute and the 'Then' leg of the order will become active. Note: the 'Then' order could also have been a stop loss order at 1.0650 (forty pips below the execution rate of 1.0690).

• If /Then OCO
  A conditional order providing that if the first order ("If" order) is executed, the second order ("Then" order) is activated as a live, One Cancels Other (OCO) order. The execution of either one of the two 'Then' orders automatically cancels the other.

  In cases where the 'If' single order does not execute, the 'Then' OCO order will remain dormant. When any part of an If / Then OCO order is cancelled, including either leg of the OCO order, all parts of the order are cancelled as well.

  An example of an If / Then OCO order would be to first place an 'If' limit order to buy USD/JPY at 118.80, fifty points below the current market rate of 119.30. The 'Then' part of the order would be an OCO order: one leg of the OCO could be a limit sell order to take profit at 119.60, (eighty pips above the execution rate of 118.80) the other leg a stop loss order to sell at 118.50 (thirty points below the execution rate). If the market reaches 118.80, the 'If' single order is executed, and the 'Then' OCO order is activated. If activated, the execution of either leg of the 'Then' OCO order automatically cancels the other.

For step by step instructions on how to place orders on the trading platform, see our User Guide.

All of the above orders may be entered as Day Orders, entered today and good until end of NY business day (1700 ET). Or, clients may choose to may enter a Good 'til Cancelled Order (GTC), which is valid until the order is executed or cancelled. Orders remain open until they are triggered or cancelled. If you close out a position manually, you must cancel any order(s) relating to that position.

Order Execution

• First In First Out (FIFO)
  Open positions are closed according to the FIFO accounting rule. All positions opened within a particular currency pair are liquidated in the order in which they were originally opened.



• Stop Loss Orders
  As a rule, sell stops are filled on our bid and buy stops are filled on our offer. This is an important point for traders who are accustomed to being filled on sell stops when the offer reaches the requested order rate. For example, if a stop order is placed to sell USD/CHF at 1.4549, the trader will be filled when the bid reaches 1.4549. In the rare instance the market gaps over a requested rate, a stop order is filled at the best available price.



• Limit Orders
  Sell limit orders are filled when the bid reaches the requested rate; limit orders to buy are filled on the offer. For example, a limit order to buy EUR/USD at 1.0456 will be filled when the offer hits 1.0456.


• Good Til Cancelled (GTC) Orders
  All GTC orders remain open until they are triggered or cancelled. If you close out a position manually, you must cancel any order(s) relating to that position.


• Orders left over the weekend or holidays
  Orders left pending at close of trading on Friday at 1630 ET or placed over the weekend are subject to a gap open on Sunday evening when trading starts at 1700 ET. For both stop loss and limit orders - if your order is triggered due to news, events or other fundamental factors, it will not be executed over the weekend. Your order WILL be executed at the prevailing price when trading opens Sunday. Because of the additional gap risk involved, you may want to reconsider leaving open orders over the weekend or holidays.

Margin
The maximum available margin is .5% (200x leverage) for mini accounts and 1% (100x leverage) for standard accounts. Traders always have the option of employing a lower degree of leverage.

The minimum margin requirement is approximately $50 per lot in a mini account and approximately $1000 per lot in a standard account. The requirements for leverage may vary with account size or market conditions, and may be changed from time to time at the sole discretion of FOREX.com.

If maximum leverage is employed, traders must maintain the minimum margin requirement on their open positions at all times. It is the customer's responsibility to monitor his/her margin account balance. FOREX.com has the right to liquidate any or all open positions whenever a trader's minimum margin requirement is not maintained. This is an important risk management feature designed to strictly limit trading losses in your account.

The trading platform automatically calculates margin requirements and checks available funds before allowing you to successfully enter a new position. If you do not have adequate funds available to enter a new position, you will receive an "insufficient margin funds" message when attempting to deal.

If the unrealized P&L of your net total open position falls below your margin balance, your account is under margined and all your open positions may be liquidated. To avoid liquidation of your positions, do not use your entire account balance as margin for open positions. Instead, leave enough funds in your account to withstand a market movement against your open positions. We suggest you always use stop loss orders to limit your downside risk.

Please contact Customer Support should you wish at any time to use a lower degree of leverage or otherwise adjust the margin settings in your account.

Rollovers
All open positions are automatically rolled forward to the next day's value date following the close of NY trading at 1700 ET.

Clients have the opportunity to earn interest on rollovers, depending on the direction of their positions, the margin employed, and the interest rate differential between the two currencies involved. For example, UK interest rates are significantly higher than Japan's, so if a trader is long GBP/JPY (i.e. holding British Pounds), they can earn interest on the roll. Only accounts trading at a margin level of 2% or more will earn interest on the roll. Conversely, if a trader is short GBP/JPY (i.e. holding yen) they will pay interest on the rollover.

Rollover credits or debits are reflected in the unrealized P&L of the open position, and a rollover report (available in the "Reports" tab of the trading platform) provides additional detail of rollover activity.

Daily Housekeeping
Daily Housekeeping will occur each evening at 1700ET and will last approximately 5 minutes. During that time, back office staff will conduct daily rolls and important system maintenance tasks will be performed. Online trading MAY be unavailable, but we will accept phone orders.

Confirmations
Deals are confirmed on screen, typically within one second. Full transaction details may be accessed on screen as well, including date, time, rate, notional amount bought and sold, USD value, and reference number.

Reporting
The dealing software tracks all trading activity in real time, allowing clients to view current open positions, real-time profit and loss, margin availability, account balances, and all historical transaction details directly on-screen.

In addition, by clicking on the 'reports' tab on the menu bar, clients may access five ad hoc reports:

Account Value Summary - an online monthly account statement. View current account balance (realized P&L) for a selected month, as well as all deposits, withdrawals, interest earned, and fees charged (if any).
Detailed Transaction Listing - lists complete trade detail for any selected date range, including deal date, currency pair dealt, trade direction (buy or sell), contract size for both currencies in the pair dealt, and executed deal rate.
Open FX Positions - a summary view of all open positions, including contract size, USD value, average rate of open positions, reval rate (current market rate), and unrealized P&L. This report supplements real-time position information available in the position management screen of the trading platform.
Order History - provides detail on all order activity for a selected data range, including order entry date and time stamp, listing of all cancelled and/or executed orders, along with its reference number. The Log Entry column provides a confirmation number and action detail for any order.
Rollover History - provides rollover details for any transaction held open past 1700 EST, including rollover rate and USD value. This report may be generated for any given date range.

Note: All reports can be printed and/or exported into Microsoft Excel via a simple cut and paste.