New Year Re-Cap On Trading Options And Our Services

Bearing in mind that Sterling fluctuated 11% against the Euro and 13% against the Dollar in 2010 its not surprising that we are helping an ever-increasing proportion of our clients protect themselves from currency fluctuations through protective trading options. After all, not many businesses can afford to gamble over 10% of their profit margin. Private clients are as equally vulnerable to this volatility on property and goods purchases and even overseas mortgage payments.

Spot Trades

If you ever need a quick transfer you can call up for a ‘spot trade’. This allows you to buy and pay for the currency now and for most major currencies, the payment will arrive within 48 hours. However to make the most of the markets you can consider other options:

Forward Contracts

Perfect if you want to be sure that you can get today’s rate for the date in the future when you actually need to transfer money. This only requires a ten percent deposit and the remainder is paid when you actually need the currency. Once you have fixed a rate you are protected from currency risk, meaning you won’t have any nasty surprises when you eventually make the payment; you will know what the exact cost will be to you in your own currency. A Forward Contract can be fixed for up to 24 months and can be flexible should your time scales change. Private clients often use fixed-forward contracts to lock in to rates for example on a property purchase or sale. Businesses often make use of flexible forwards to allow them to calculate import/export costs and profit margins. A business might for example, fix the rate for the total amount of currency required for the next six months, then simply draw down from this total each month for each payment at the same rate.

Market Orders

Market orders are ideal for clients who really do not want to lose out on a great rate of exchange. Your currency broker can help you set a realistic target rate of exchange to fit your time frame. If this rate is hit, the currency will be automatically bought for you. This means that even if the rate is hit momentarily, in the middle of the night, you have managed to secure it.

Rate Monitoring

If you aren’t keen to have currency automatically bought for you, speak to your broker and let them call you when the market starts to near a rate you would be interested in. This is a flexible approach and allows you to discuss how to make your decision on when to trade and re-evaluate if your target rate of exchange is realistic depending on what is happening in the markets. This is applicable for trades of £20,000 or more.

Regular Payments

Ideal for making transfers for overseas mortgages, pensions or personal salaries. Rather than call up each month to book another transfer and be in doubt about the rate of exchange, lock into regular payments. Not only does this protect you from fluctuations but also saves you time and hassle as you can pay for this by a regular standing order.