FAQs: Questions about trading
How quickly can I trade?
Your trading account can be activated within minutes of receipt of your completed documentation and VFX authorisation.
How complicated is trading with VFX?
Trading with VFX is extremely simple. You can open an account online, assign a dedicated broker and trade either by phone or online. Our exceptional levels of service and groundbreaking technology enable you to complete efficient, hassle-free transactions.
What is a same-day transaction?
Same/next day. We also offer contract to be settled on the day of trade (same day value) and overnight (next day) settlement. VFX must have received cleared funds between 12pm and 2pm depending on the required currency. Your payment will be sent automatically, the working day to your designated beneficiary. Please note some currencies may have longer settlement periods. This contract type is ideal for currency required on an urgent basis.
What is a spot transaction?
A spot transaction is an agreement to buy or sell a currency to be delivered and settled usually within two working days, as per the value or settlement date agreed. VFX can provide settlement to clients of up to five working days to allow for BACS payments. Spot transactions are an ideal tool for businesses or private individuals that require delivery.
What is a forward contract?
A forward contract allows the buyer to lock in the rate for up to one year on a specified maturity date, effectively removing future risk from any movements in the foreign exchange market. As a risk management tool this contract provides protection against fluctuating exchange rates. Also known as hedging, this can be one of the most effective ways of managing your foreign exchange exposure. A forward contract is ideal for private individuals wishing to fix the cost of purchasing an overseas property or a business wishing to take advantage of the current market rate against future obligations. Forward contracts will usually require a deposit of between 5% and 10% deducted from the sum payable on the maturity date.
What is a forward time option contract?
It's also known as fixed forward. This works in exactly the same way as a standard forward contract but allows the funds to be drawn down in full or as a partial amount prior to contract maturity. The option is available within a maximum of a three month time window. For example, if you purchased currency on 1st February for maturity on 1st June you could request a time option three months prior to this date on 1st March, allowing you to make unlimited draw downs between these two dates. This is ideal if you need a fixed exchange rate but are unsure of the date you require funds within the time window. VFX also has the facility to roll the maturity date of a forward by executing a swap if required. This may involve additional cost.
Why is a margin required when buying currency on a Forward basis?
A margin is required by the VFX as standard security against currency purchased on a forward basis. The bank holds on your behalf 10% of the total amount of any forward contract and the remaining 90% is paid upon on the maturity date of your contract. It is important to note that VFX must maintain a 10% margin at all times against your trade to reflect any sudden market movement. VFX may conduct a 'margin call' to maintain your deposit at 10%. Forward margin is also protects VFX against defaults on forward contracts.
Can I leave an order for VFX to execute if the market reaches a certain market level?
A limit order placed in the market will enable you to buy or sell a currency when the market reaches a particularly required level, higher than the current market price. We will then monitor the market and confirm your order is filled if the market reaches your specified level / target rate. You can place a time limit on the order or let the order run GTC (Good Tell Cancelled). A limit order can also be requested on an unconfirmed alert only basis (without commitment). This type of order is worked 24 hours a day on the international market.
Can VFX help protect me if the rate moves against me?
A stop loss order placed in the market will enable you to buy or sell a currency set a lower level exchange rate than the current market rate. This protects you against negative movements in the exchange rate, and limits your loss. You can place a time limit on the order or let the order run GTC (Good Till Cancelled). A stop loss can also be requested on an unconfirmed, alert-only basis (without commitment). This type of order is worked 24 hours a day on the international market. Stop Orders that are activated are filled at the best possible rate, and are not guaranteed at the rate at which they are entered, there is therefore a risk that such orders may be executed on less advantageous terms.
How does it work for selling currencies?
VFX on account opening, provide all clients automatic access to 23 multi currency accounts. This allows you to sell currencies, ideal for repatriation of export profits or an individual's foreign wages. We can receive your foreign currency wire transfers on your behalf for no charge, allowing you to hold funds on account. Funds can then be converted into your chosen currency when the market is favorable or you require. Funds can be executed and payment made on a same day basis.
Is there a minimum or maximum trade size I execute?
VFX has no minimum or maximum transaction. Trades can range from £500 upwards. VFX processes foreign exchange transactions from as little as £500 to several million. Our access to the foreign exchange provides VFX with the ability to provide all of our clients, regardless of size, premium exchange rates.
Do rates vary according to volume of trade?
Yes, fixed costs for every trade are the same regardless of trade size. Therefore rates margins will be tighter the larger the trade.
What rate will I get?
The rate you receive will be based on the live market inter-bank price. This rate will include our margin depending on trade size and be quoted to you online or by phone. Please note live inter-bank rates change per second. Teletext and certain internet websites usually have a time delay.
What happens if my circumstances change?
On occasion, due to unforeseen circumstances, plans and requirements change. In the case where you have secured a forward contract but find you will no longer require to take delivery of the currency at the maturity date, you may sell the contract back to the market provided paying any losses and charges incurred.
Is it important I obtain a commercial rate?
Yes, very important; it is always beneficial to look beyond your bank and obtain exchange rates from an external supplier in order to make comparisons. You have nothing to lose by doing this.
Are there any hidden charges, costs or commissions?
No. VFX does not add any additional charges costs or commission to your transaction. The only charge we make is a payment fee for onward transmission of your funds.
What sources of information does VFX use?
Our experienced brokers use a wide range of sources to gather accurate, reliable and up-to-date information, used to inform our clients. These sources of information vary and include; CNN, CNBC, Reuters, Bloomberg, financial news websites, investment banks, independent market analysts and our own in house market experts. Our proactive approach through our online and phone broking, keep our clients up-to-date and in touch with exchange rate movements.
How can currency market volatility work for me?
The foreign exchange market is extremely volatile providing fluctuating rates per second. VFX specializes in providing market information and up to date news vital in assisting you in deciding when to execute transactions. VFX always uses the very latest technology to help manage your risk and maximize your opportunity. This allows you to benefit from currency fluctuations that move in your favor.
What affects currency exchange rates?
As a general rule fx markets move macroeconomic factors examining the behaviour of the economy as a whole. Major movements in the exchange rate occur for three main reasons:
Interest Rates - Each currency has a central bank, and this central bank issues an overnight lending rate. This is a prime gauge of a currency's value. Base Interest rates, are normally change by central banks on a monthly basis (if changed).
Unemployment Rate - The unemployment rate is a strong indicator of a country's economic strength. When unemployment is low, this usually reflects a strong economy and currency.
Geopolitical Events - Like all markets, the currency market is affected by what is going on in the world. Key political events around the world can have a big impact on an economy and the value of its respective currency.
How can you minimize currency risk?
We have many tools available to to help you reduce your currency risk. The most commonly used contract is a Forward which allows you to lock in a currency rate today for a future date, whilst only paying initial margin (a deposit) to secure your rate. The balance of payment will be payable on your agreed future date. The reason for doing this is because no one knows where the currency rate will be in three or six months time, but by securing your currency rate early, you can lock in your costs with suppliers, and manage your exposure in a much more certain way.