Trading via brokers and dealing rooms (by phone)
Performing Forex trading via Dealing Room dealers (over the
phone) requires
knowledge about the way dealing rooms work, and the
terminologies used in
the course of trading.
At start, the client should specify whether he/she is
interested in obtaining a
QUOTE (in order to make a deal) or just an INDICATION. In the case of an
indication, the price given does not bind the dealer, but
rather provides
information about market conditions.
When asking for QUOTE, the trader must specify the currency
pair and the
deal amount (volume). For example: “Need a quote for EUR/USD
in
EUR100,000”.
It is wise to withhold from the dealer the intended
direction of the deal,
specifying the pair only. Accordingly, the dealer then
provides a quote
comprising two prices, buy and sell (“both sides quote”).
The quote binds the
dealer for the very second it is given. If the trader does
not immediately ask
for execution, then the price is no longer in force. The
dealer would then tell
the customer “risk”, or “change”, meaning – the price quoted
is no longer in
force. In such case,
the trader should ask for a new price.
On the other hand, in order to make a deal, the trader must
proclaim “buy”
or “sell”, together with the currency (or the price).
An example:
•
The trader asks for a quote for EUR/USD.
•
The dealer says “1.5010/15”.
•
If the trader wants to buy EUR, he/she says “buy" (or
"buy EURO”, or
“15”.
•
If the trader wants to sell EUR, he/she says “sell" (or
"sell EURO”, or
“10”.
The moment the trader says “buy” (or “sell”) he/she is bound
to the deal,
regardless of the market situation.
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