What is the Leveraged Foreign Exchange Trading ?

Leveraged Foreign Exchange Trading allows you to hold a position much larger than your account balance and conduct your foreign exchange investment with a minimum outlay. You can purchase or sell one currency for another with the hope of making a profit when the value of the currencies changes in favour of your position. Foreign Exchange market runs continuously on a 24-houurs basis, allow you to exit or open a new position regardless of the hour.

What is Bullion ?

Bullion is a term used to describe any product produced from a precious metal whose value is determined almost entirely by its precious metal content. Bullion is traded as a commodity and has a market for trading in quantities, both on delivery and for future trades (otherwise known as “futures”).

What is LOCO-London Gold Trading ?

Loco London Gold Market in Hong Kong is modeled on the London Gold Spot Market. Dealers usually quote their own books, and deal with the investors as principal. Loco London Gold are traded and quoted against the US dollar. The minimum size for one contract is 100 ounces.

What is a Spot Transaction ?

A spot transaction is the purchase or sale of financial instrument at a fixed price, with delivery and payment to take place on the second business day after the day of the transaction.

What is Bid / Ask / Spread ?

Bid is the highest price that is available at market to the seller for the particular currency at the moment.
Ask is the lowest price achievable at market to the buyer
Together, the two prices constitute a quotation; the difference between the two is the spread, that is, the difference between the price offered by a dealer willing to sell something and the price he is willing to pay to buy it back.

What is Rolling Interest of Currency Contract ?

Due to different foreign currencies bear different interest rates, client might earn or need to pay interest according to the foreign currency contract position. Contract in a hedged position (commonly known as “Locking”) is subject to interest calculation on individual contract basis until the opened contract is closed. As hedging in such regard often causes additional investment cost, it is not a recommended strategy.

What is a cross-rate/cross-currency ?

The term cross rate is used to describe the relationship between 2 currencies other than your home currency. For example, someone living in France would consider the Mark/Yen a cross rate, but the Mark/Franc would not be considered a cross rate if you lived in France or Germany. A US citizen would, however, call the Mark/Franc a cross rate. An easy way to think of cross rates may be as non-dollar denominated exchange rates.

What is the interest determination of Hong Kong Gold Market about ?

Interest determination is one of Hong Kong Gold Market's characteristics. The determination of interest is done once a day at 11:00 during weekdays and at 10:30 on Saturday. Positive interest arises when the demand for physical gold exceeds the supply. Buyers cannot get hold of gold are awarded interest paid by sellers who cannot deliver gold. Negative interest arises when the supply of physical gold exceeds the demand for it. As a result, sellers who do not get sale proceeds are awarded interest paid by buyers who do not have sufficient cash to pay sellers. Even interest arises when supply and demand for physical gold or cash are in equilibrium - that is neither party has to pay the interest. Interest is quoted in Hong Kong dollars per ten taels.

How do I manage risk ?

The most common risk management tools 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.

What is Limit Order ?

A Limit Order is a trading order placed to buy or sell at a certain price. The order contains mainly two variables, price and duration. The trader specifies the price at which he wishes to buy/sell a certain currency pair and also specifies the duration that the order should remain active. It is used to enter the market, add to a pre-existing position and profit taking.

'Day Orders' remain active in the market until the end of the trading day, and “Good Till Friday”(GTF) remains active in the market until the end of the trading day on Saturday 04:00 hours.

What is Stop Order ?

It is used to limit loss potential on a transaction by placing an order to buy or sell at a certain price. The order contains the same two variables, price and duration. The same variations are used to specify duration as in Limit Orders (Day Order and GTF).

What is One Cancels Other (OCO) Order ?

It is often used to place both a stop loss and a profit taking (limit) order around a position — the first of the orders to execute automatically cancels the redundant order.

What is Hedging ?

Hedgers are individuals and firms who wish to establish a known price level weeks and sometimes months or years in advance for products they want to buy or sell in the cash market. This futures position protects them against unfavourable price changes in the interim that might occur. Alternatively, a hedger may want to establish a guaranteed margin between their purchase cost and their selling price.

What is Arbitrage ?

The buying or selling of a commodity in one market and immediately transacting an opposite trade of an equal amount of the same commodity in a different market, in order to capture a risk less profit.

How to calculate Floating Profit & Loss (P&L) ?

Floating P&L is calculated by the current evaluation price of the market. It will be changed from time to time according to market fluctuation.

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.

What is margin call ?

Margin Call is the amount that you should deposit to the account immediately to cover your position. Call Margin will be zero if Equity is larger than Effective Margin.

What is Effective Margin ?

Effective Margin is the available trading amount result from Equity minus Margin Requirement. It is the available balance for trading.

   New Balance
+ Floating P&L
-------------------
  Equity
- Margin Requirement
-------------------
= Effective Margin
==========

What is "Minimum Price Changes" (Minimum Fluctuation) ?

The minimum amount that the price can fluctuate up or down is determined by the exchange. This minimum amount is known as the tick. Consider a gold futures contract, the tick is 10 cents per ounce. This amounts to $10 on a 100-ounce contract.

What does it mean have a "Long" or "Short" Position ?

In trading parlance, a long position is one in which a trader buys a financial instrument 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 financial instrument in anticipation that it will depreciate. In this scenario, the investor benefits from a declining market.

How to Maintain the Login Password for Online Trading ?

Clients are recommended to take the following measures in order to maintain high security standards :

1.  Change your login password in your first time login ;
2.  Change your login password periodically, through the subscribed Electronic Service(s) ;
3.  Never discuss your password with anyone else ;
4.  Create a password that is easy to remember but hard for anyone else to guess. Do not use birth dates, telephone
numbers, or I/D card numbers.