FREQUENTLY ASKED QUESTIONS
1.
What is forex?
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Where is the central location of the forex market?
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Who are the participants in the forex market?
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What are the most commonly traded currencies in the forex market?
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How are currency prices determined?
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When is the FX market open for trading?
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What is the difference between an "intraday" and "overnight position"?
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How is risk managed?
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What margin rates are required to open (purchase/sell) and hold (maintain) a position?
10.
Will I be assigned a broker to work with or can I choose one that I prefer?
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How much money do I have to keep in my account once it is open?
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What account fees do I have to pay? What about commissions?
13.
How quickly can I open an account and how soon can I begin trading?
14.
How fast can I expect my fills to be returned to me?
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Where are my funds held?
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How do I deposit or withdraw money from my account?
17.
Can I transfer an account from another firm to VAM FOREX?
18.
Can I assign VAM FOREX the right to trade a system on my behalf for my account?
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Does VAM FOREX offer brokerage services in commodity futures markets?
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Is VAM FOREX registered and regulated?
21.
What is VAM FOREX's policy regarding the privacy of client information?
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What is "forex"?
Off-exchange retail foreign currency contracts, also referred to as the "foreign currency," "forex" or "fx", are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY). Forex is simply the simultaneous purchase of one currency and selling of another.
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Where is the central location of the forex market?
Forex trading is not centralized on an exchange as with the stock and futures markets. The forex market is considered an over-the-counter (OTC) or off-exchange market, due to the fact that transactions are conducted directly between two counterparties over an online trading platform, electronic network or via the telephone.
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Who are the participants in the forex market?
VAM FOREX customers trade forex directly with the carrying FCM/Dealer. VAM FOREX customers are not direct participants in the interbank forex market because the respective FCM/Dealer holding the customer's funds provides the quotes and acts as counterparty to customer trades. VAM FOREX customers are actually participating in the off-exchange retail forex market, which is only a small portion of the overall forex market - and is NOT the direct interbank market.
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What are the most commonly traded currencies in the forex market?
The most often traded or "liquid" currencies are those of countries with stable governments, respected central banks and low inflation. Most forex transactions involve trading of the "major" currencies which include the US Dollar, Japanese Yen, Eurocurrency, British Pound, Swiss Franc, Canadian Dollar and the Australian Dollar.
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How are currency prices determined?
Currency prices are affected by a variety of economic and political conditions, the most important of which are interest rates, inflation and political stability. Moreover, governments sometimes participate in the forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. This is known as central bank intervention. Any of these factors, as well as large market orders, can cause high volatility in currency prices. The sheer size and volume of the forex market makes it extremely difficult for any one entity to "drive" the market for any length of time.
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When is the forex market open for trading?
Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, then London, and New York. The forex market is typically open 24 hours a day from Sunday 4pm ET until Friday 4pm ET, except on scheduled holidays (exact times may vary by FCM/Dealer).
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What is the difference between an "intraday" and "overnight" position?
Intraday positions are all positions opened and subsequently closed anytime during the 24 hour trading period ending at roll-over (typically 4:00 pm CST). Overnight positions are any positions that remain open at at roll-over, which are automatically "rolled-over" (based on the respective currencies' interest rate differential) to the next day's rate.
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The most common risk management tools in forex trading are the limit order and the stop-loss order. Disclosures explaining the limitation of stop and limit orders (such as no guarantee as to fill price, fills may be substantially worse than expected and the risk of trading during fast markets) can be found on our order types webpage. Forex options are also commonly used to help manage and/or hedge risk exposure.
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What margin rates are required to open and maintain a position?
VAM FOREX customer margins vary for underlying spot transactions (depending on what type of account you open and the particular FCM/Dealer), and greater leverage may be available for forex options contracts. However, leverage can be a double-edged sword. Highly leveraged forex trading can lead to large losses and the possibility exists that you could lose all or more than all of your forex investment.
For example, assuming a VAM FOREX customer is provided 100:1 leverage, this means that the investor can execute trades worth 100,000 USD with an initial margin requirement of 1,000 USD. However, if an account balance breaches the "maintenance margin" requirement, then the FCM/Dealer, at its sole discretion, may close (offset) any and all open positions at the current rate. At the discretion of the FCM/Dealer, margin rates may be increased from time to time, especially before a weekend or holiday, to account for unexpected price volatility that can occur while the markets are closed. If you are unsure how forex spot and options margins work, please click here.
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Will I be assigned a broker to work with or can I choose one that I prefer?
As forex accounts are generally self-directed, no broker will be assigned to you. Generally, any broker you speak with or correspond with at VAM FOREX is capable of assisting you with any questions that you may have.
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How much money do I have to keep in my account once it is open?
Once your account is open, there is generally no minimum balance requirement beyond the margin requirement rates for any position(s) held in your account. If you are unsure how forex spot and options margins work, please click here.
What fees do I have to pay? What about commissions?
VAM FOREX and the respective FCM/Dealer are typically compensated through the bid/ask spread. However, certain FCMs/Dealers and as well as some transaction types may subject the account to markups and/or other transaction charges (such as ECN platform fees, give-up fees, commissions, etc.) Further, FCMs/Dealers may charge for outgoing wire transfers and other account transactions - such charges will vary by FCM/Dealer and account type.
How quickly can I open an account and how soon can I begin trading?
Depending on the FCM or dealer, new accounts can be opened and ready to trade in as little as 1-2 days (with funds wired into the account).
How fast can I expect my fills to be returned to me?
For online accounts, market order fills are returned to you instantaneously. If you are placing a market order via telephone with a broker, often you can have your fill back while you hold. Fill reporting times may vary depending on the type of order placed and the condition of the market when your trade is executed.
Forex accounts are held in the name of the respective FCM/Dealer at a financial institution. Unlike commodity futures markets, forex customer account funds are not required to be maintained in a customer segregated account and, therefore, forex customer funds may not receive such protections afforded to customer-segregated accounts.
How do I deposit or withdraw money from my account?
This will vary by FCM/Dealer.
Can I transfer an account from another firm to VAM FOREX?
Yes, you can. Simply complete a transfer request form and complete the new account form. Contact us for details.
Can I assign my VAM FOREX broker the right to trade a particular system on my behalf for my account?
Yes. However, each trading system has different requirements and VAM FOREX reserves the right to accept or refuse to trade a system on behalf of a client. Each system will be reviewed on a case-by-case basis.
Does VAM FOREX offer assistance for traders who want to invest in regulated futures markets?
Yes. Contact us for details or visit the VAM FUTURES website.
Is VAM FOREX registered and regulated?
Yes, VAM FOREX is a division of Valhalla Capital Group, LLC, registered with the Commodity Futures Trading Commission (CFTC) as an Independent Introducing Broker and a member of the National Futures Association (NFA) in such capacity. NFA ID #0402215
What is VAM FOREX's policy regarding the privacy of client information?
The confidentiality of client information is strictly enforced at all times. Please review our Privacy Policy for more details.
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