Forex Club

ActTrader™ Trading Rules

This article describes the rules for FOREX trading using the ActTrader™ trading platform.
If you haven’t traded on the FOREX market before, this article will help you understand how to make transactions to earn on the FOREX.
If you have experience in trading on the FOREX, this article will help you understand how the ActTrader™ platform differs from other trading applications, learn its distinctive features and understand terminology used in the platform.

1) Making a profit.

To make a profit, you must buy currency low and sell it high or vice versa, i.e. sell it high and then buy it low. The profit you earn depends on the difference between the buying and selling prices.
If you correctly forecast price movement trends, you make a profit. If your forecast was wrong, you lose money.
Even though you have your deposit in US dollars, you can sell any other currency from the list of currency pairs at any time. Thus you can earn both when a currency appreciates and when it declines. Since our terminal gives you access to CFDs on various commodities, you can also earn when relevant commodity prices rise or decline.

2) Transaction amount. Trading account balance. Rate of return and risk.

The amount of the profit you earn also depends on the amount of the transaction, i.e. volume of currency bought or sold or CFD base commodity. The bigger the amount of transaction, the more profit you can gain when the price changes, but risk of loss is also higher.
The maximum transaction amount depends on deposit, i.e. amount of money on your account. When trading on the FOREX market, you can buy and sell currency amounts exceeding your deposit amount by means of leverage. The FOREX CLUB maximum leverage can be up to 1 to 100, and to execute a transaction with a minimum amount of 10,000, you need a $100 margin. Your account funds are used as the margin for your transactions. CFD instruments also allow you to trade at volumes many times higher than your actual deposit, called “margin trading.” This means that you can trade in CFDs for all commodities with a margin of dozens of times less than the value of these commodities.
Your margin is neither a commission nor a transaction fee: the money still belongs to you, and you can withdraw it at any time if it is not being used to cover current open positions.
You can specify a transaction amount for the given deposit to manage your leverage and risks accordingly.
See more details on how to specify a transaction amount in paragraph 13 below.

3) Instruments.

The FOREX market trades in currency pairs. For example, when you trade the EURUSD (EUR/USD, EURUSD) instrument, you buy or sell the desired amount of euros (EUR) for US dollars (USD), for example at an exchange rate of 1.3567 US dollars for 1 euro. Traders typically call this type of transaction buying or selling the EUR/USD instrument. The currency that you buy or sell is usually referred to as the base currency.
The currency used to buy the base currency (which is a reference for the value of the base currency) is referred to as counter currency (or quote currency).
CFD instruments are based on the prices of various commodities (crude oil, gold, stocks etc.) denominated in US dollars per commodity unit price (barrel, ton, ounce, etc.). When you trade such instruments, it is usually called trading in oil or platinum CFDs.

4) First transaction.

Before the transaction is executed, you must decide on the following:
- Select an instrument – the currency pair on which you want to make a profit using its exchange rate movements (such as EURUSD, if you have an opinion on how euro will change its relative value against US dollar), or any CFD instrument, if you have an opinion on which way prices for the CFD base commodity will move;
- Select the transaction amount - the larger the amount, the more you can gain when the price changes, but your risk of loss is also higher;
- Choose whether you want to buy or sell the instrument (if you think that the euro will appreciate against the US dollar, you buy EURUSD, otherwise you sell it; it's the same with CFDs - if you believe the CFD base commodity will appreciate, then buy it; otherwise sell it).
To make the transaction, you must submit an order to the brokerage company. To do this, click Sell or Buy, set the parameters mentioned above and click OK. The order will be briefly displayed in the Orders window. Soon after the order is executed at the price you chose, the open position will be displayed in the Open Positions window.
You can also execute a transaction by clicking on the desired quote in the graph or in the quotes window.
Note that if you click a quote or click the Sell/Buy buttons several times, you’ll open several positions accordingly (see more details in paragraph 14).

5) Open position.

Once the transaction is executed, you have an open position. When you have an open position, each change in the quotes for your instrument causes a change in your profit or loss. This is the so-called current or floating profit.

6) Closing a position.

You must close the position in order to take the floating profit and deposit it to your account.
The simplest way to close a position is to click the current quote in the Close column of the Open Positions window. In this case the position will be closed completely.
You can also use the Close Position option in the pop-up menu (to open it, right-click on the position). In this case you can specify whether you want to close the position completely or partially.
Note that if you try to close the position using other methods (executing a transaction for the instrument you have an open position for - either buy or sell), a new transaction will be executed and the previously opened position will not be closed (see more details in article 14).

7) Traded instruments.

You can trade the following instruments:

EUR/USD euro/US dollar
GBP/USD British pound/US dollar
USD/JPY US dollar/Japanese yen
USD/CHF US dollar/Swiss franc
EUR/JPY euro/Japanese yen
EUR/CHF euro/Swiss franc
CHF/JPY Swiss franc/Japanese yen
AUD/USD Australian dollar/US dollar
NZD/USD New Zealand dollar/US dollar
USD/CAD US dollar/Canadian dollar
CAD/JPY Canadian dollar/Japanese yen
GBP/JPY British pound/Japanese yen
EUR/GBP euro/British pound
GBP/CHF British pound/Swiss franc
AUD/JPY Australian dollar/Japanese yen
EUR/CAD euro/Canadian dollar
GBP/CAD British pound/Canadian dollar
AUD/CAD Australian dollar/Canadian dollar
AUD/CHF Australian dollar/Swiss franc
EUR/AUD euro/Australian dollar
CAD/CHF Canadian dollar/Swiss franc
NZD/JPY New Zealand dollar/Japanese yen

Brent Crude Oil (BRN)
Light Sweet Crude Oil (CL)
Henry Hub Natural Gas (NG)
Heating Oil (HO)
WTI Crude Oil (WBS)
Platinum (PL)
Palladium (PA)
Copper (HG)
Zinc (ZS)
Aluminum (AH)
Nickel (NI)
XAUUSD gold
XAGUSD silver

Indices

• S&P 500 (ES)
• NASDAQ-100 (NQ)
• Dow Jones (YM)
• Nikkei 225 (NKD)
• S&P MidCap 400 (EMD)
• AEX - Netherlands (FTI)
• CAC 40 - France (FCE)
• FTSE 100 - England (Z)
• DAX - German (FDAX)
• EURO STOXX 50 (FESX)
• IBEX 35 - Spanish (IBX)
• Russell 2000 (TF)
• Bovespa - Brazil (BZ)
• Hang Seng - China (HIS)

Stocks

• Apple Inc.
• Bank of America
• Boeing Co.
• Citigroup Inc.
• Coca-Cola Enterprises
• Ford Motor Co.
• General Electrics Co.
• Google Inc.
• Harley-Davidson
• IBM
• Intel Corp.
• Johnson&Johnson
• McDonald's Corp.
• Microsoft Corp.
• Nike Inc.
• Philip Morris
• Starbucks Corp.
• Wal-Mart Stores
• Walt Disney Co.
• Yahoo! Inc.
• China Mobile
• China Unicom Ltd.
• HSBC Holdings
• Hutchinson Technology Inc.
• Petrochina
• Pertobras S.A.
• Vale S.A.

8) Pip. Tick. Pip value. Calculating profit.

A tick is the smallest possible change in an instrument quote. A pip is the low-order digit point in a quote. A quote that changes by one unit of the low-order digit is said to change by 1 pip. For currency pairs, a tick equals a pip, but for CFD instruments a tick can be more or less than a pip, depending on the instrument. For currency pairs tick is equal to pip, but not always. In currency pairs with floating (flexible) market spread 5th or 3rd in a quotation mark is available (depending on the pair). But for CFD instruments a tick can be more or less than a pip, depending on the instrument. For currency pairs quoted in JPY (Japanese yen) a pip is equal to 0.01. For all other instruments, a pip is 0.0001.
The pip value for currency pairs is the profit gained if the instrument is sold at a price one pip higher than the price at which it was bought. The pip value is instrument-specific and also depends on the amount of the transaction. For CFD instruments a tick value is usually applied, but the rules are the same as for currency pairs.
For currency pair positions with an amount of 10,000 the pip value is approximately $1, that is:
For instruments with USD (US dollars) as the counter currency and with a transaction amount of 10,000, the pip value is $1.
For instruments with CHF (Swiss francs) or CAD (Canadian dollars) as the counter currency and with a transaction amount of 10,000, the pip value is $1 divided by the US dollar exchange rate against the counter currency.
For instruments with GBP (British pounds), AUD (Australian dollars) or NZD (New Zealand dollars) as the counter currency and with a transaction amount of 10,000, the pip value is $1 multiplied by the exchange rate of the counter currency against the US dollar (the current exchange rates for the GBP/USD, AUD/USD or NZD/USD pairs).
For instruments with JPY (Japanese yen) as the counter currency and with a transaction amount of 10,000, the pip value is $100 divided by the USD/JPY exchange rate.
The profit for any transaction can be calculated as follows:
The amount of the transaction is divided by 10,000, multiplied by the pip value for a transaction amount of 10,000, and multiplied by the pip difference between the opening and closing prices.
For CFD instruments, tick values are published on the Company website. These values are static and do not change.

9) Spread.

At any point in time the price to buy an instrument is somewhat higher than price at which you can sell it. Therefore, if you buy an instrument and sell it immediately, you will suffer a small loss. This difference is called spread, and it is a source of profit for the brokerage company.
In our company spreads on some currency pairs are fixed, and some are floating (flexible) by market, i.e. available to change at any second. For CFD instruments, spreads are floating and change virtually each second. You can easily wait to make your transaction until the spread is minimal. Since CFD spreads are floating, they are not displayed in the specification. In the fact that the spread is flexible it’s not possible to display it in the spread specification.
Spreads are measured in pips:

EUR/USD	*
USD/JPY	*
USD/CHF	*
GBP/USD	*
USD/CAD	*
EUR/JPY	*
GBP/JPY	*
EUR/GBP	*
CHF/JPY	*
EUR/CHF	*
GBP/CHF	*
AUD/USD	*
NZD/USD	*
AUD/JPY	*
EUR/CAD	10
GBP/CAD	15
AUD/CAD	8
AUD/CHF	10
EUR/AUD	10
CAD/CHF	10
NZD/JPY	10
CAD/JPY	6

* - flexible market spread

10) Predefined order.

You can also open a position using a second type of order – a predefined order. A predefined order tells the broker to buy or sell the instrument if its price reaches a specified level.
Predefined buying orders can be of the following types:
Stop – you think that if the price increases to a set level it will continue to increase, so your order will be executed when the current buying price reaches or exceeds the order price.
Limit – you think that if the price falls to a specified level, it will stop falling and start to increase. Your order will be executed when the current buying price is equal to or lower than the order price.
Predefined selling orders can be of the following types:
Stop – you think that if the price falls to a set level it will continue to fall, so your order will be executed when the current selling price is equal to or lower than the order price.
Limit – you think that if the price increases to a specified level, it will stop increasing and start to fall. Your order will be executed when the current selling price reaches or exceeds the order price.
* You can place predefined orders for currency pairs no closer than 10 pips from the current price, and a number of pips for CFD instruments is published in a specification on the Company website.

11) Using orders to close positions.

By means of predefined orders you can also close positions. In order to do this you must specify a position you want to place an order for and a currency pair quote which will automatically trigger closure of the position.
In this case, a limit order will tell the broker to take the profit when the instrument price reaches the level you determined. This order is also called a Take Profit.
A Stop order will limit your losses, helping you close the transaction with minimal losses if the instrument price moves in the opposite direction. This type of order is also called a Stop Loss.
If the open position has floating profit, you can use a Stop order to close the position and take the profit in case the price trend reverses.
If the Stop order to close the position is not set, you risk losing all the funds on your account. If instrument price changes result in total current losses for your open positions that are equal to your account balance, all of your positions will be automatically be closed.
* You can place predefined orders for currency pairs no closer than 10 pips from the current price, and a number of pips for CFD instruments is published in a specification on the Company website.

12) Trailing stop.

If the price of an instrument in which a trader has an open position moves in the desired direction, the trader is often tempted to move the conditional Stop order to close. First the order is moved to the zero-loss level, and then to the profit zone to protect current profit from opposite price movements.
To automate the relocation of the Stop order, you can use the so-called Trailing Stop. The Trailing Stop order is placed just like the ordinary Stop order: either when a new position is opened or for the existing positions.
When a Trailing Stop is placed, you must specify a distance in pips (the Trailing Stop Distance) for the Trailing Stop to follow the instrument price at a distance.
Here’s how the Trailing Stop works: after a new quote is placed, if the distance between the Stop order and current price exceeds the specified Trailing Stop Distance, the Stop order will follow the price. If the distance between the Stop order and current price decreases, the Trailing Stop would remain unchanged. So by means of Trailing Stops customers both increase their profit and maximally protect themselves from losses and lost profits.

13) Calculation of maximum available transaction amount.

The maximum amount of a new transaction available for the given moment depends on your Usable margin, i.e. amount of funds on your account considering current rates on open positions and deposit used.
So if you have an open position with a current profit:
Usable Margin = Balance- margin amount used + current profit.

If you have an open position with a current loss:
Usable Margin = Balance - margin amount used - current loss.
The maximum amount of a new transaction for currency pairs depends on the Usable Margin in the following way:
Maximum amount of a new transaction = 100 * (Usable margin - Spread * Pip value).
For the CFD instruments with an absolute expression of margin requirements:

Vmax = MV*UsblM/(MR+C+St*Pt), where

Vmax - maximum new transaction amount with a CFD instrument;
MV – minimum acceptable transaction amount with a CFD instrument (published on the Company website);
UsblM – Usable Margin;
MR – margin for the minimum acceptable transaction amount with a CFD instrument (published on the Company website);
C – commission fee for a minimum-amount transaction with a given CFD instrument;
St – CFD-specific spread in ticks;
Pt – tick value for the minimum acceptable transaction amount (published on the Company website).

For the CFD instruments with the relative expression of margin requirements:

Vmax = MV*UsblM/(Pr*MR+C+St*Pt), where

Pr – current price of the instrument;
MR – margin for the minimum acceptable transaction amount with a CFD instrument (published on the Company website).
Please note that the maximum transaction amount for the most of CFD instrument is 750 (seven hundred fifty) lots (minimum amounts).

14) Multiple open positions for the same instrument.

If you have an open position for an instrument and you think that the quotes will move in the chosen direction, you can open additional positions for the same instrument. In order to do this you need to execute another transaction involving the same instrument.
If you are not sure about your chosen trend, you can open an opposite position for the same instrument because the ActTrader™ platform lets you simultaneously execute both buy and sell transactions for the same instrument. This trading method is called hedging. You can choose to hedge some or all of your open positions. To hedge a position, use the Hedge function in the pop-up menu and select the amount you want to hedge. This sends the brokerage company an order, and after its execution a new position opened in the opposite direction will appear in the list of open positions.
Even if you have used all of your deposit for open transactions, you can still hedge a position completely.
For example, if your deposit allows you to make a buy transaction of 100 (or multiple transactions with a total amount of 100), you can still open one sell transaction of 100 (or multiple sell transactions with a total amount of 100).

15) Decreasing the amount of open positions.

If you have an open position for an instrument but think that the quotes may not move in the chosen direction, you can reduce your risks by decreasing the amount of the open position. You do this by partially closing the position.
In order to partially close the position, you choose the Close Position function from the pop-up menu and decrease the amount of the transaction instead of completely closing it.
For example, if you have an open position for 20, you can close it partially by specifying a closing amount of 10 (not 20).

16) OCO orders.

You can place two types of predefined orders – Stop and Limit, so that only one is executed and the other is cancelled. This pair of predefined orders is called One Cancels the Other (OCO). To place OCO orders, first place one order, then right-click on it and select the menu item One Cancels the Other. When you place the second conditional order you can select which existing order to pair it with as OCO.
OCO orders must have the same direction, which means that both should be buy or sell orders, though the amounts of these OCO orders can be different.
Such orders are useful if you do not have time to track an open position. By placing OCO Stop and Limit orders you tell the broker to close your open position at the desired profit level or to limit your loss on that open position.
OCO orders may also be linked to an open position or a predefined order that you already placed to open the position when the market price reaches a specified level.

17) Rollover fee.

While trading on FOREX, you aren’t actually buying currency; rather, you are taking one currency on credit from the broker and giving the broker the other currency in the pair on credit. These are credit transactions that incur interest. You pay interest to the company on the currency you’ve bought, and you receive interest from the broker on the currency you used to buy the Base Currency. Interest rates on various foreign exchange currencies differ; therefore the difference between the interest prices has its value. The difference between interest rates is called Rollover Fee. This fee depends on whether you buy or sell the instrument; it also makes the broker’s profit. A negative fee is written off your account, and the positive fee is credited to your account.
The Rollover Fee is accrued at the end of each business day at 21.00 GMT. In the Table you can see the number of pips that will be written off or credited to your account at 21:00 GMT. If you close the position before 21:00 GMT, no Rollover Fee will be charged.
The Rollover Fee is not applied to CFD instruments.

18) Price change of the market order. Trading Range.

Quote values for various instruments are subject to rapid changes, sometimes changing several times a second. It is possible that by the time your buy or sell order reaches the brokerage company’s server the company can no longer make a transaction at the initial price. When this happens, you receive a Price Changed notice with a new price. If you agree to the offered price, confirm it with a click. The offered price is final for this order and the broker can’t change it. This means that if you agree to the new price you won’t receive another change notice.
When the market is active, a trader often needs to close a transaction no matter what and is not worried about the actual price differing by a few pips. If that is the case, a trader can set Trading Range. By setting a Trading Range, the trader agrees that if the price changes within the stipulated range, he/she will make a transaction at the new price.

19) One Click Trading.

To allow active traders make a large number of transactions, ActTrader™ has an option for One Click Trading. Unlike standard mode, with One Click Trading you will not see a window for setting the parameters of the market order after you click on the price. Your order is sent immediately without additional confirmation. In this mode, the order amount is specified in advance in the price window and the Trading Range for the order is equal to zero. This means that even if the price changes by one pip, no transaction will be made and the order will be cancelled. When this happens, you receive a Price Changed notice with a new price. If you agree to the new price, confirm it with a click. The new price is final for this order and the broker can’t change it. This means that if you agree to the new price you won’t receive another change notice.
Take care and use this option only when needed, since it comes with the risk of pressing the Order button by mistake.