Forex/CFD Platform FAQ

Forex/CFD Platform FAQ

OptionFair Forex/CFD trading platform is a user friendly interface version of regular Forex trading, making it accessible for retail traders. Additionally, a trader has the ability to trade both binary options and Forex together, utilizing the same account balance. This opens up a world of possibilities for traders and ability to create new trading strategies.

Forex is the international foreign exchange currency market, the largest trading market in the world with around c.$335Bn in trading volume daily. It is the trading of currencies against each other.

Retail Forex trading is what allows you, the trader, to participate in this market that was previously reserved exclusively for countries, multinational companies and banks.

CFDs – contracts for difference, CFDs are a derivative product that a trader can trade on the difference between the prices on these assets.

DO THE TRADES HAVE AN EXPIRY TIME?

NO – Unlike binary options, Forex & CFD trades have no expiry time. They can be kept open as long as you wish or until the Take Profit or Stop Loss is reached.

HOW CAN I PROFIT?

In Forex/CFDs you can profit or lose with every PIP. Unlike binary options where you only profit or lose on the expiration of a trade, with Forex/CFDs you profit or lose with every single movement of the asset.

WHAT IS A PIP?

A PIP is usually the 4th decimal point in the price of a currency pair. If the price is 1.2456 – the 4th decimal point is the number 6. If the price moves to 1.2459, then it has moved 3 PIPs. Note that with some assets the PIP definition may be different.

WHAT IS THE PIP VALUE?

If a PIP is the 4th decimal point, this would make one PIP equal to 1/100th of a percent. To calculate its value, take the PIP in decimal form (0.0001), divide it by the current exchange rate, and then multiply it by the number representing the actual value of the trade.
We have made it easier by automatically calculating the PIP value for you. You can see the value directly under the Invest Amount. By changing your Invest Amount, you can see how that reflects on the PIP-Value. Because of this feature, you can easily figure out how much money you need to invest to make $300 on 10 PIPs of movement.

WHAT IS A STOP LOSS?

A Stop-Loss is a value that you can set and change on any open Forex/CFD trade and represents the amount that is acceptable to you as a loss. This amount is assigned as 100% of your investment (rounded) when you open the trade and is adjustable according to the price of the asset or the amount of money you would like to risk. When this is adjusted you will see money added or deducted to/from your balance. Trades reaching the STOP-LOSS will automatically expire.

WHAT IS A TAKE PROFIT?

A Take-Profit is a value that you can set and change on any Forex/CFD trade and represents the amount that is acceptable to automatically close the position in profit. This amount is assigned as 100% of your investment (rounded) when you open the trade and is adjustable according to the price of the asset or the amount of money you would like to make in the trade. Trades reaching the TAKE PROFIT will automatically expire.

WHAT IS AN ORDER?

A trader can set an order to execute at a certain price on the asset. This is not a TRADE. The order will only execute if the asset reaches the specific price and there is enough money in the balance of the account. If there is not enough money, a gap in the market, or you have reached your total exposure, the order will not execute.

WHAT IS A PREMIUM? HOW MUCH IS IT?

A Premium fee is charged for holding open a trade overnight. The fee is usually levied at 00:00 GMT. The premium amount is between 0.013%-0.026% daily on the leveraged amount depending on the asset.

WHAT IS THE SPREAD?

The difference between the bid (buy) and the ask (sell) price of an asset.

WHAT IS LEVERAGE?

OptionFair’s Forex/CFD platform allows trades to be leveraged.
In order to understand Leverage, imagine an example in which the leverage is 1:50. In this case an investment of 100 EURO allows a trade value of 5,000 EURO, so the investor can profit (or lose) exactly as if they traded on 5,000 EURO of their money.
On the OptionFair platform, rather than deciding on a trade value and computing the margin requirement from that number, traders decide how much they want to invest – and everything is automatically calculated from there (such as the pip value and stop loss limit). This is why when the stop loss limit is changed, the investment is automatically adjusted.
The default leverage at OptionFair is 1:50

WHAT IS MARGIN?

On the OptionFair Forex/CFD platform, there is no need for extra margin. When you invest $100 into a Forex/CFD trade, just like in binary trading, this is the maximum amount you can lose on this trade and does not affect any of your other trades. Meaning you can use the entire amount of the investment.

WHAT IS THE MINIMUM TRADE?

The minimum trade on a standard account is $/€/£50 per trade (equivalent to 50 EURO in other currencies).

 

 

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