Exchange vs. Over-The-Counter OptionsForexGen options can be traded either on an exchange or in the over-the-counter (OTC) market, meaning between two parties.
Types of Transactions Manufacturing companies who buy in raw materials from abroad and export finished products undertake both the purchase and sales of foreign exchange, as they are always dependent upon the supplying companies’ country of origin and its currency for their invoicing.
Margin Trading Margin means borrowing money from a broker to buy a stock, or commodity, or currency pair and using the investment as collateral. It is, to all intents and purposes, a performance bond in cash or another means of security deposited by a trader.
Role of the Adviser As the adviser is the primary contact between a market maker and a client, the adviser must demonstrate an overall understanding of the foreign exchange market in order to earn and maintain the trust of clients.
Barriers This is a standard option that automatically cancels out if spot trades through a prearranged knock-out level. This level is set below the initial spot for a call option, and above spot for a put.
ReversalsReversals are primarily a Floor Trader strategy used to capitalize on minor price discrepancies between calls and puts. As implied by its name, reversals are the exact opposites of conversions.
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