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TRADING SPREADS

 
Pips and spreads

Pips and spreads show the value of a currency pair to the investor and to the broker.

What is a pip?

A pip is a number value. In the Forex market, the value of currency is given in pips. One pip equals 0.0001, two pips equals 0.0002, three pips equals 0.0003 and so on. One pip is the smallest price change that an exchange rate can make. Most currencies are priced to four numbers after the point. For example, a five pip spread for EUR/USD is 1.2530/1.2535.

In the major currencies, the price of the Japanese yen does not have four numbers after the point. In USD/JPY, the price is only given to two decimal points – so a quote for USD/JPY looks like this: 114.05/114.08. This quote has a three pip spread between the buy and sell price.

What is the spread?

The spread is the difference between the buy (also called bid) price and the sell (also called ask) price. Two prices are given for a currency pair. The spread represents the difference between what the market maker gives to buy from a trader, and what the market maker takes to sell to a trader.

If a trader buys any currency and immediately sells it - and no change in the exchange rate has happened - the trader will lose money. The reason for this is that the bid price is always lower than the ask price

For example, the EUR/USD bid/ask currency rates at your bank may be 1.2015/1.3015. This represents a spread of 1000 pips. This spread is very high compared to the bid/ask currency rates for online Forex investors, such as 1.2015/1.2020 - a spread of 5 pips.

In general, smaller spreads are better for Forex investors because a smaller movement in exchange rates lets them profit from a trade more easily.

The spread is where the market maker will make their money. See easy-forex® trading features for information on our spreads.

Futures

In Futures Spread Trading the trader simultaneously buys (longs) and sells (shorts) futures contracts for two related commodities or securities. The rationale behind this kind of strategy is that as futures contracts approach maturity, prices of different contacts will often change differently over time, leaving savvy traders an opportunity to profit. We explain this in more detail below, but overall spread trading offers good traders the opportunity to profit off contract spreads instead of taking a position on the market’s direction.

Some traders may also pursue this kind of trade, believing they reduce their overall exposure to the market, since losses from longs will be offset from shorts and vice-versa. Futures spread trading generally is a more conservative approach to trading overall than simply investing in one futures contract.

FX – In FX, spreads traders seek to buy a currency cross in order to take advantage of rollover interest, while simultaneously shorting a similar pair to reduce their exposure to unpredictable fluctuations in price.

Withdrawal

Withdrawing funds from your Forex4money account is easy and quick. Withdrawal requests received before 1pm AEST will be acted on the same day, with all others being acted on within 24 hours. Forex4money only uses secure methods for sending your funds to you, and fully complies with internal and regulatory procedures to ensure the funds are safely processed. For more details on withdrawal procedures, see below or contact us for more information.

How to Perform a Withdrawal?

To execute a withdrawal from your Forex4money trading account simply login to the cPortal above and from the withdrawal tab you can complete the online form. This form is completed online and uses an electronic signature to verify your authorisation to perform the withdrawal. This is directly sent through to us via email meaning you do not need to print, complete and scan or fax the document back to us, which saves time and the need for paperwork.

If you prefer, you can also choose to download the PDF version of the form and submit it to us that way.

What do I need to know?

Forex4money follows strict compliance procedures including anti-money laundering rules designed to protect all clients. There are several details to be aware of:

Forex4money does not allow third party payments. Funds can only be sent to an account in the same name as the Forex4money trading account.

All withdrawals will be sent back to the original source up to the initial amount. Profit withdrawals or any amount over the initial deposit can only be sent by bank transfer

Funds can only be sent to a credit card if the initial deposit was in the last 120 days. If it exceeds 120 days, funds will be sent via bank transfer.

Funds can only be sent to MoneyBookers account if the initial deposit from MoneyBookers was in the last 90 days. If it exceeds 90 days, funds will be sent via bank transfer.

In some instances, credit cards will not accept a deposit, depending on the issuing financial institution. In those situations, funds will be sent by bank transfer.

We do not charge fees for withdrawing funds by bank wire transfer. However, please note that you will be liable for any fees charged by the banks involved in the transaction, including intermediaries

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