TRADING FOREX ON THE - Saxo Bank

TRADING FOREX ON THESAXOTRADER PLATFORMSaxo Capital Markets (Australia) Pty Ltd Tel: 61 2 8267 9000 Email: enquiries@saxomarkets.com.au Website: www.saxomarkets.com.au1

TRADING FOREX ON THE SAXOTRADER PLATFORMOPEN DEMOACCOUNTOPEN LIVEACCOUNTSAXO BANK GROUP OFFICES THROUGHOUT THE WORLDSaxo Bank Group is an international trading and investment specialist with headquarters inCopenhagen, Denmark. Our global presence is maintained by local offices in Australia, Singapore,Switzerland, United Kingdom, France, Spain, Italy, Greece, Cyprus, the United Arab Emirates, Japan,Hong Kong and other financial centers around the world.ONLINE TRADING THROUGH SAXOTRADER,SAXOWEBTRADER and SAXOMOBILETRADERSaxo Bank Group is one of the leading providers in trading and investments worldwide, and offersprivate and institutional investors the opportunity to trade Forex, FX Options, CFDs, Stocks, StockOptions, ETFs, Futures, Contract Options and Bonds. Saxo Bank Group offers more than 36,000financial instruments.Online trading takes place through the multi-award winning* platforms of Saxo Bank Group:SaxoTrader, SaxoWebTrader and SaxoMobileTrader. Through these three platforms, clients canaccess both their account and the international markets 24 hours a day.Saxo Capital Markets (Australia) Pty Ltd is a wholly owned subsidiary of Saxo Bank A/S, and islicensed by the Australian Securities and Investments Commission.*Saxo has received many awards and recognition for outstanding technology, products and services.To view a complete list visit our website www.saxomarkets.com.au/awards

CONTENTSPART A: GENERAL INFORMATIONADVANTAGES OF TRADING FOREX THROUGH SAXO CAPITAL MARKETS. 1WHAT IS FOREX MARKET AND A CURRENCY PAIR?. 2ADVANTAGES OF TRADING SPOT FOREX IN COMPARISON TO OTHER FINANCIAL PRODUCTS. 3CHARACTERISTICS OF THE FOREX MARKET. 4BASE CURRENCY AND VARIABLE CURRENCY. 5SPECULATION ON MARGIN. 6INTEREST RATES. 7EXAMPLE OF A TRADE IN EURUSD. 8CURRENCY PAIRS IN SAXO CAPITAL MARKETS. 9PART B: TRADING GUIDE FOR SAXOTRADERTRADER PLATFORM . 11ACCOUNT SUMMARY. 16FOREX ORDER TYPES. 20PART C: RISK WARNING AND DISCLAIMERRISK WARNING. 23DISCLAIMER. 23

TRADING FOREX ON THE SAXOTRADER PLATFORMOPEN DEMOACCOUNTPART A: GENERAL INFORMATION* For fast help, press “F1” on your keyboard.4OPEN LIVEACCOUNT

ADVANTAGES OF TRADING FOREXTHROUGH SAXO CAPITAL MARKETS Cooperate with the leading onlinetrading specialistSaxo Capital Markets is constantly awarded for itsquality offered in Forex transactions. It has wonmany industry awards* as a financial provider. Product RangeSaxo provides the broadest coverage of currencypairs offered in the industry. Saxo offers 184 Forexcurrency crosses including spot gold, silver, platinumand paladium. Trade FX on Spot, Forward Outrights,Vanilla Options, Touch Options, and more. Available LiquiditySaxo cooperates with the biggest financialinstitutions in the world (Top Tier 1 Banks) to offercustomized liquidity. All clients have availableliquidity in EURUSD up to EUR 25,000,000. And it’seasy to request a quote for larger amounts. Speed of Order ExecutionSaxo offers investors immediate, fast and accurateorder execution at the best available price. We areproud of our order execution statistics, viewable atwww.saxomarkets.com.au Live PricesSaxo offers access to green, streamed, liveprices. What you see is what you get. Low Required MarginSaxo provides leverage of your initial capital upto 1:50, meaning a margin as low as 2%. Order PlacementSaxo offers market, limit, stop-limit and stoporders (with trailing functionality). All ordersare available as Day Order, Good til Date orGood til Cancel. Open an account in major currenciesof your choice. Manage your portfolio through themulti-award winning platforms withone account 24/7.Traders get access to: SaxoTrader,SaxoWebTrader and SaxoMobileTrader. Competitive PricingPricing is highly competitive, stable and transparentwith tight spreads.Saxo Capital Markets (Australia) Pty Ltd Tel: 61 2 8267 9000 Email: ps@saxomarkets.com.au Website: www.home.saxo/au1

OPEN DEMOACCOUNTTRADING FOREX ON THE SAXOTRADER PLATFORMOPEN LIVEACCOUNTWHAT IS FOREX MARKET AND A CURRENCY PAIR?orex, or FX, stands for Foreign Exchange. Banks,Governments, international corporations, hedgefunds and individual investors all take part in exchangingcurrencies in the Forex Market.FIn Forex trading there are always two currencies involved.These are referred to as a pair. The pricing of a currencypair values the first currency against the other. Byestimating what is going to happen to a currency pair inthe future, investors can act today to take advantage ofcoming price movements.Currencies are always traded in pairs. If you believethat euro (EUR) is gaining strength compared to theU.S. dollar (USD), you buy euros and sell U.S. dollars atthe same time. If you believe the U.S. dollar is gainingstrength compared to the euro, you buy U.S. dollars andsell euros simultaneously. Pairs are traded in a certainhierarchy order though. Irrelevant of which of thesetwo mentioned scenarios you wish to trade, you use theinstrument EURUSD.2When buying EURUSD, the investor has bought euro,paying with U.S. dollars. If the investor wishes to buy U.S.dollars, he would sell EURUSD. Buying is also referred toas “going long” and selling is also referred to as “goingshort”.By nature, a Forex trade places a long (buy) and a short(sell) exposure to two different currencies simultaneously,as Forex is always traded in pairs.Forex spot is not traded on an exchange, but Over theCounter (OTC). It is traded 24/5 via market makersworldwide, and FX exchange rates are steered by supplyand demand.The three main centers of trading are London, NYC andTokyo. Other hubs are in Singapore, Switzerland, HongKong, Germany, France and Australia.

ADVANTAGES OF TRADING SPOT FOREXIN COMPARISON TO OTHER FINANCIAL PRODUCTS Ability to Trade 24/5Transactions in the Forex market begin at 5 o’clock local Sydney time,and end on Friday at 17:00 local NY time (EST). World’s Largest Financial MarketForex is much larger than the world’s equity and bond marketscombined. It is 50 times larger than the combined volume of all U.S.equity markets. World’s Most Liquid Financial MarketSaxo offers available liquidity. As market makers, with cooperationwith Tier 1 banks, Saxo offers each client customized liquidity. Westream large amounts to each individual, in up to EUR 25mio. Quotesfor larger amounts can easily be requested for quick and accurateexecution. Low Required Margin – High LeverageWith Saxo you can trade on up to 50 times leverage. Low Transaction CostSaxo offers competitive pricing with tight spreads. Please visit ourtrading conditions for a complete list of currency pairs and targetspreads. Ability to Take Advantage of Ascending or DescendingMarketsAn investor can make a profit in both rising and falling markets, asForex is always traded in pairs. Easy Access to InformationBoth private and professional investors have easy access to bothmarket updates and economic data releases, which can have animpact on the currency market.Please visit www.tradingfloor.com* for more information.(By clicking on this, you agree to be redirected to a 3rd party site)*TradingFloor.com (TradingFloor) is the property of Saxo Bank A/S, regulated andheadquartered in Denmark. Saxo Capital Markets (Australia) Pty Ltd (SCMA) is a whollyowned subsidiary of Saxo Bank, and as a subsidiary of Saxo Bank, have the opportunityto make TradingFloor available to its clients.Saxo Capital Markets (Australia) Pty Ltd Tel: 61 2 8267 9000 Email: ps@saxomarkets.com.au Website: www.home.saxo/au3

TRADING FOREX ON THE SAXOTRADER PLATFORMOPEN DEMOACCOUNTOPEN LIVEACCOUNTCHARACTERISTICS OF THE FOREX MARKETPURPOSE OF INVESTMENTS INFOREXFOREX CATEGORIESForex is used both for hedging and speculation.For example, if an international company wishesto protect itself from the currency risk that itfaces when buying a commodity in euro andreceiving dollars from selling it. The companycan decide to hedge its risk with an oppositeexposure with a foreign exchange trade.The major currency pairs (referred to as‘majors’) are the currency pairs comprisedof the most significant currencies in globalmarkets. EURUSD, GBPUSD, EURGBP, USDJPY,and EURCHF are all considered majors. Mosttransactions today are done in Majors; thisis where the largest volumes take place.Speculative trading is also very common in theForex market and can be based on technicalanalysis as well as fundamental analysis of acertain currency pair or country.Minor Currency pairs:Major Currency pairs:‘Minors’ are pairs including G10 currencies,but the combinations are less traded than themajors. These are e.g. GBPJPY, AUDCAD andEURNZD.Exotic Currency pairs:Exotic currency pairs, or the exotics, includecurrency pairs from emerging markets.Examples: USDZAR, USDTHB, EURHUF andEURPLN.FOREX MARKET AND FINANCIALPRODUCTSThe exchange of currencies can take placeas either spot or future settlement (forwardoutrights). The purpose of this manual, however,is primarily to explain the spot market.4

BASE CURRENCY AND VARIABLE CURRENCYThe first currency listed in the currency pairis called the base currency, and the secondcurrency listed in the currency pair is called thequote or variable currency.EURUSD trading at 1.3845 means:EUR 1 USD 1.3845When you look at the price of a currency pair,it tells you how many of the quote currency itwould take to buy, or sell, one unit of the basecurrency. In our example the price of 1 euroequals to 1.3845 American dollars (USD). Thesecond currency is the currency at which a profitor loss is expressed.Looking at a chart; If the base currency isstrengthening against the quote currency, thecurrency pair will be moving up. If the quotecurrency is strengthening against the basecurrency, the currency pair will be moving down.SPREAD AND PIPSIf a person travelling abroad needs to convertmoney to a foreign currency, he or she willalways notice that there are two prices next toa currency pair on the board at the airport. Bid(the one to the left) refers to the price at whicha client can sell the base currency of a pair, andask, or offer (the one to the right), is the price atwhich a client can buy the base e difference between the bid price andthe ask price of a currency pair is called thespread.The spread is the incorporated commission thatexists in every currency pair.The width of the spread depends on manyfactors, such as the liquidity of the specificcurrency, the volatility of the price of thecurrency pair, etc. In other words, the spread isconnected to the risk that a market maker runsin offering two-way trading.Pip is a unit FX movements are measured in.If EURUSD is moving from 1.3845 to 1.3846,there has been a change of 0.0001, or in short;1 pip. For most currencies 1 pip refers to thefourth decimal, but there are few currency pairswhere a pip refers to other decimal places. Forexample USDJPY. If USDJPY moves from 115.67to 115.68, i.e. 0.01, the pair has moved 1 pip.The price of a pip depends on the pair. In EURUSD for a position of 100,000, anincrease or decrease of the currency by onepip means an increase or decrease of EUR100,000*0.0001 USD 10 In USDJPY for a position of 100,000, anincrease or decrease of the currency by onepip means an increase or decrease of USD100.000*0.01 JPY 1000Saxo Capital Markets (Australia) Pty Ltd Tel: 61 2 8267 9000 Email: ps@saxomarkets.com.au Website: www.home.saxo/au5