Frequently Asked Questions
What is Forex??
FOREX — the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world. Daily turnover of the market is 6-8 trillion USD.
A large part of the market is made up of currency traders (rather than participants who are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in), who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.
In the foreign exchange market there is little or no 'inside information'. Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.
Currencies are traded against one another. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar.
If you want to know more about how to start trading in Forex, please proceed to our free Forex course article.
How can I start trading Forex?
You'll need to register a trading account with LLC Inquot. Then you can begin using our Forex client program to buy and sell currencies. This will take you less than 5 minutes of your time!
Who owns Forex and where is it located?
It's not owned by anyone in particular. Forex is an interbank market, meaning that its transactions are conducted only between two participants — seller and the buyer. So as long as the current banking system will exist, Forex will be here. It's not connected to any specific country or government organization.
What are the working hours of Forex market?
Forex market is open from 22:00 GMT Sunday (opening of Australia trading session) till 22:00 GMT Friday (closing of USA trading session).
What is margin?
Margin is money you need to have in your broker account to secure your open position.
What are the "long" and "short" positions?
Long position is a "buy" position, meaning that this position will be in profit if price goes up. Short position is a "sell" position, meaning that this position will be in profit if price goes down.
How much money do I need to start trading Forex?
With some Forex brokers you can start trading Forex with as little as $1. Usually, the minimum amount varies from $100 to $10,000 ($100,000 and more for Interbank trading).
Can I lose more than I invest in Forex?
You cannot. Inquot will not allow you to lose more than the available funds on your trading account. It will simply close your losing position when the resulting account balance becomes too close to zero. The loss that is bigger than the trader's deposit is a direct loss of the broker. It is in the our interest to prevent such losses. For security purposes brokers implement a Stop-Out level (usually about 20%), which means that the most losing position will be closed once (equity / used margin) × 100% becomes equal to or less than this level.
Can I open a buy trade in EUR/USD and withdraw the bought euros?
No. There is no delivery in spot Forex market. Such trade is a contract, not an actual act of exchange.
Can I earn by introducing clients? (IB)
Yes. Depending on the requirements and the volume of clients you wish to introduce. To negotiate an individual rebate scheme for introducing clients to Inquot, simply email your request and contact details to email@example.com and our Partnership Desk will contact you.
Are my deposited funds protected in any way?
LLC Inquot is committed to provide the highest standard of legal compliance and a peace of mind to our traders. More information about Client Money Protection can be found here.
Do you deduct any fees, or taxes from me?
No, we do not. There are no hidden extra fees when using Inquot. Inquot is only compensated for its services by the spread (Bid-Ask price difference), or by the commission per lots traded. Any possible commissions can be discussed with us by the email firstname.lastname@example.org.
Do you hold my funds in segregated accounts?
Yes. We work with several banks to ensure your funds are secured in segregated accounts, separate to Inquot’s day to day business banking operations.
What is a Stop Loss?
The Stop Loss level is the available functionality allowing clients the ability to limit their loses per trade or trades, by pre-setting a level at which a trade or trades should be closed, if the market goes against the client.
What is Take Profit?
Take Profit is a function designed to lock in the profits. The trader sets a level which, if it is reached by the market price, then the trade is closed in order to bank the profits.
What is a Pending Order?
A Pending Order contains the maximum level at which a trader wishes to Buy or to Sell. Such an order is placed into the market, provided that the future Buy or Sell price will be equal to the predefined price. Pending orders can be Stop, or Limit orders: Buy Stop, Buy Limit, Sell Stop, or Sell Limit.
What is a Sell Stop?
Sell provided the future "BID" price is equal to the pre-defined value. The current price level is higher than the value of the placed order. Orders of this type are usually placed in anticipation of that the security price, having reached a certain level, will keep on falling.
What is a Trailing Stop?
A trailing stop differs from a conventional (hard or fixed) stop. With a trailing stop you can set the stop to move as the market moves. For example; you can pre-set the stop to move up by 25 pips should your market order move in your favor by this amount.
What is Sell Limit?
Sell provided the future "BID" price is equal to the pre-defined value and the current price level is lower than the value of the placed order. Orders of this type are usually placed in anticipation that the security price, having increased to a certain level, will fall.
What is Buy Stop?
Buy provided the future "ASK" price is equal to the pre-defined value and the current price level is lower than the value of the placed order. Orders of this type are usually placed in anticipation that the security price, having reached a certain level, will keep on increasing.
What is Buy Limit?
Buy provided the future "ASK" price is equal to the pre-defined value. The current price level is higher than the value of the placed order. Orders of this type are usually placed in anticipation of that the security price, having fallen to a certain level, will increase.
What is Free Margin?
Free Margin is the amount of funds which are not involved in trading. When placing a trade, the Margin required will be deducted from the Free Margin.
Free Margin = Equity – Margin.
PIP Calculation example.
In order to calculate the pip value, please use the following formula: Pip (as decimal)/Market Price x Lot Size (in units) = Pip Value
For example; if you wish to calculate the pip value of 1 lot of EUR/USD at a market price of 1.44800: 1 lot = 100 000 units, 0.0001/1.44800 x 100 000 = 6.9061 EUR.
The result of the pip calculation will be displayed in the base currency of the currency pair. If you wish to check the price in a different currency, you will need to make the appropriate conversion.
What is a Lot?
A lot is a standard size of a transaction.
1 lot or a Standard lot = 100,000 units of the base currency in a currency pair.
If we take EUR/USD for example, 1 lot will be 100,000 units of EUR.
Other volume related terms:
* 0.1 lots or a Mini lot = 10,000 units.
* 0.01 lots or a Micro lot = 1,000 units.
What is a Stop out?
Stop out is activated once the margin level falls below Inquot's margin level requirement.
What is a CFD?
A CFD, also known as a "contract for difference", is a contract between a broker and a trader, regarding the price of an underlying instrument. It is traded in the form of opening a position in the direction of a certain instrument price. If the position moves in favor of the trader, then the broker will pay the difference between the opening price and the closing price. If the position moves against the trader, this will result in paying the difference to the broker.
Can I place a trade with the smartphone?
Yes. Application is available for Android and IOS.
What is a Gap?
Gaps are created after a period of inactivity in the market, for example, after the weekend when the market is closed, the market can then open on Sunday at a much higher, or at a much lower price than the closing Friday price.
What is Slippage?
Slippage occurs when a client's trade is executed, not at the requested price, but at the next best available price. Slippage is created by the high volatility of the market, when the market price changes rapidly.
What is Margin?
The necessary guaranteed funds required to open positions, or to maintain Open Positions, as determined in the Contract Specifications for each Underlying Financial Instrument.
What is hedging?
Hedging consists of opening two opposing positions of the same size, on the same trading symbol.
What is a PIP?
A PIP (Percentage in Point) is the smallest price movement. For example on EUR/USD, if the price changes from 1.07412 to 1.07413, then price moved by 1 pip (10 points).
What is Leverage?
In trading of leveraged financial instruments, a smaller margin deposit can control a much larger total contract value. Leverage gives you the ability to make large profits, and at the same time keep risk capital to a minimum. For example, if you choose 1:100 leverage, it means that a 1,000 margin deposit would enable you to execute a buy or sell order of 100,000 worth (1 Lot) of currency. Similarly, with 5,000 deposit, you could trade with 500,000 (5 Lots) and so on. However, higher leverage, without proper risk management, can lead to increased losses as well as very substantial gains, as it magnifies the outcome of the position either way.
Upon choosing a level of leverage, bear in mind that, as the leverage increases, so does the risk you are exposed to. Even though a lower leverage requires more funds for placing trades over the market, it will also lower the risk you are facing. Please consider carefully your experience and risk appetite when choosing your leverage.
What Lot Size can I trade?
We offer trade volumes starting from 1,000 units (0.01 lot) and upwards, with a minimum increment of 0.01 lots. For example, you can trade 0.02 lots. The minimum lot size when trading Gold, or Silver is 0.1 lots, with increments of 0.1 lots.
What Leverage can I choose?
We offer flexible leverage options on forex, from 1:2 - 1:500.
What is the spread?
The spread is the difference between the Bid and the Ask price.