SPOT MARKET TRADES

What Does Spot Trade Mean?

The purchase or sale of a foreign currency for immediate delivery. Spot trades are settled "on the spot", as opposed to at a set date in the future. Also known as "cash trades".

The standard settlement timeframe for foreign exchange spot transactions is T+2 days; i.e., 2 business days from the trade date. A notable exception is the USD/CAD currency pair, which settles "same day" or T+1.

How do Spot Trades work?

Any Currency House client can execute trades 3 ways:

• Voice Broker
  Client executes transaction via telephone call. For example, client A phones into the main trading floor or to assigned account manager to obtain a live market quote, client agrees and accepts quote from trader and the Spot trade gets executed. Currency House provides a personalized account manager and trader for of its clients. The client is free to contact any of the three contacts provided
  
  
  • 1. Account trader
  • 2. Account Manager
  • 3. Main trading desk


• eCommerce
  Some clients prefer to communicate through e-mail and other means of contact. Currency House is pleased to execute trades through any modes of communication. Once the trade has been agreed- a confirmation will be sent via whichever modes of communication (outlining the details of the transaction) was used to confirm a client's trade.


• Online Platform
  Currency House knows the importance of time management and how crucial it is for company employees to focus on top priority tasks. Therefore, by using the Currency House online platform to execute FX trades and send vendor payments, time will be saved and work productivity enhanced.

Why use Spot Trades?

Companies involved in international trade may be required to make payments, or to receive payments, in a foreign currency. A spot contract allows a company to buy or sell foreign currency on the day it chooses to deal. Business relationships can be won and lost with the smallest of errors. At Currency House, we understand this and guarantee precision timing for all Spot transactions. Whether your requirements include:

• Vendor payments
• International payroll
• International accounts receivables
• Or any other type of payable or receivable

Currency House will process these settlements securely and timely.

Types of Spot Trades/Orders:

• Over-Night Order
  Currency markets are open 24/7 365 and many investors have been taking advantage of this sleepless market. Since currency pairs are constantly fluctuating, corporations and other investors have started to place over-night orders to tap into potential market swings in their favor. For example, client A is a Canadian corporation and an importer of calculators from the US: indications point to US Dollar weakness after the North American stock market close(4pm-9:30am). Client A requests an over-night order below current market price for USD/CAD in hopes that it will hit over-night, thus obtaining a more favorable exchange rate.


• Limit Orders
  There are three main types of limit orders which are typically referred to as Entry, Stop, and Limit (traditional limit) orders. These types of orders enable you to have more control over the buying and selling price of the currency pairs which you are trading.


• Entry
  Entry orders is a request that is placed with the intention of opening a new position at a particular price. You can specify the price at which you would like to purchase a particular currency pair and then these orders remain active until you cancel the existing order or the specified price is achieved and the trade executes.
  This type of order is useful for traders to guarantee you receive the desired purchase price for a specific currency pair. Entry orders give you more control over the price which you pay to purchase currency at.


• Stop
  A stop order is a kind of limit order linked to an open position with the intention of stopping additional losses if a price reaches a pre-defined point beyond the purchase price. As with market orders and entry orders, stop orders remains in effect until the position is liquidated or is cancel.
  Stop orders (sometimes referred to as stop-losses) are incredibly useful for Forex traders who would like to limit the amount of losses incurred on a particular trade. Additionally, a stop can be used to secure a profit once a particular favorable price is reached on an open position so that if a currency pair’s price starts to slip again you will still sell your currency at a profit.


• Traditional Limit
  A traditional limit order is similar to entry and stop orders, but is designed to specify at what level you would like to take your profit. If you are going long on a position a limit order would be set at a price above the purchase price. Conversely, if you are shorting a position then the limit order would be placed at a price below the purchase price.


• Duration of Orders
  Orders typically last until the stated purpose of the order has been accomplished. Market orders are always executed at the time a transaction is requested; however, limit (entry, stop, and limit) orders can be placed for with a specified duration. The default for a transaction is to remain active until executed, but Currency House allows you to specify the following designations for a currency trade:
  
  
  • GTC (Good 'Til Canceled)
    An order to buy or sell at a specified price. This order remains open until filled or until cancelled.
  • GFD (Good For the Day)
    A GFD order remains active in the market until the end of the trading day. Since foreign exchange is an ongoing market the end of day must be a set hour.