Foreign Exchange FAQs

Any questions you have about Forex Trading will most likely be answered here

OMFinancial requires a minimum deposit of $10,000 to open an account. Traders must maintain a balance $10,000 in the account at all times. OMFinancial has varying levels of margin call activity based on your equity balance vs. your initial margin requirement. You should always have more than the required minimum initial margin in your account at any one time so as to provide a buffer in case of any adverse price movement.

If the market moves against a customer's position, OMFinancial will request additional funds through a "margin call." If there are insufficient available funds, and the ‘margin call’ is not met within the required time frame OMFinancial will immediately close out the customer's open positions.

You will be charged a flat fee on a per lot per side basis. The fees are based on the volume of trades you execute, the higher the volume the lower the fees. There is no charge to place orders or call levels you will only be charged when an order is executed.

Currency prices are affected by a variety of economic and political conditions, most importantly 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. However, the size and volume of the Forex market makes it impossible for any one entity to "drive" the market for any length of time.

Currency traders make decisions using both technical factors and economic fundamentals. Technical traders use charts, trend lines, support and resistance levels, and numerous patterns and mathematical analyses to identify trading opportunities, whereas fundamentalists predict price movements by interpreting a wide variety of economic information, including news, government-issued indicators and reports, and even rumour. The most dramatic price movements however, occur when unexpected events happen. The event can range from the government raising domestic interest rates to the outcome of a political election or even an act of war. Nonetheless, more often it is the expectation of an event that drives the market rather than the event itself.

The most commonly traded or 'liquid' currencies are those of countries with stable governments, respected central banks, and low inflation. Today, over 85% of all daily transactions involve trading of the major currencies, which include the NZ Dollar, US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and the Australian Dollar.

No. OMFinancial requires a minimum deposit of $10,000. OMFinancial allows customers to execute margin trades at up to 100:1 leverage. This means that investors can execute trades up to $100,000 with an initial margin requirement of $2000. However, it is important to remember that while this type of leverage allows investors to maximize their profit potential, the potential for loss is equally great.

In trading parlance, a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. In this scenario, the investor benefits from a rising market. A short position is one in which the trader sells a currency in anticipation that it will depreciate. In this scenario, the investor benefits from a declining market. However, it is important to remember that every FX position requires an investor to go long in one currency and short the other.

Volatility is a statistical measure of a market's price movements over time. Volatility is high if prices change dramatically in a short period of time. Liquidity is a market condition that allows large transactions to be absorbed by the marketplace with little or no effect on price stability.

In this section we describe the foreign exchange market in some detail. In order to gain a practical understanding of foreign exchange trading, there is no better way than to open a demo account, where you can experience what it's like to trade the Forex market without risking any capital.

As a general rule, a position is kept open until one of the following occurs: 1) realization of sufficient profits from a position; 2) the specified stop-loss is triggered; or 3) another position that has a better potential appears and you need these funds.

OMFinancial has access to most financial markets around the globe. For full details of the available markets please contact OMFinancial directly.

The most common risk management tools in FX trading are the limit order and the stop loss order. A limit order places restriction on the maximum price to be paid or the minimum price to be received. A stop loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against an investor's position. The liquidity of the Forex market ensures that limit orders and stop loss orders can be easily executed.

The minimum transaction size varies from currency to currency. With New Zealand dollars the minimum amount is NZ$100,000. You should check with OMF as to the minimum amounts for other currencies.

You should arrange a time to meet with one of OMFinancial’s client advisers who will explain trading to you in detail. It is then simply a matter of - Completing OMFinancial’s Client Application form and supplying the necessary documentation; - Reading and agreeing OMFinancial’s Terms and Conditions; - Lodging sufficient funds to cover the initial margin on the position(s) you wish to open in OMFinancial’s bank account.

A daily statement is sent electronically from our Operations Department, which provides all transaction details, including date, price, notional amount bought and sold. Account statements are sent at the beginning of each month, and list all transactions for the previous month by currency and value date, a summary of all current open positions, and account balances as calculated at the close of business on the last business day of the month.

View the list of OMFinancial's bank account details.

Your funds deposited with OMFinancial will be paid directly into our Client Segregated Funds Account in accordance with The Futures Industry (Client Funds) Regulations 1990.

You may maintain your account in any of the major currencies covered in Margin Foreign Exchange trading. These include: New Zealand dollars; Australian dollars; US dollars; British pounds; Japanese Yen and Eurodollars. For Futures trading, your account will be a multi currency account with transactions processed in the relevant currency the futures contract is traded in.

Interest is paid on all excess funds in your account. Interest is also earned, or charged, on open currency positions depending on whether a currency has been bought or sold. These latter interest payments are credited to a bought currency (similar to a credit balance in an interest bearing cheque account) and debited to a sold currency (similar to a debit balance in a cheque account). More information is available on this topic at your request.

OMFinancial’s trading desk is open 24 hours daily from 7:30am Monday morning through until markets close on Saturday.

The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. Foreign Exchange trading is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.

The Forex market is called an 'Interbank' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.

A true 24-hour market, Forex trading begins each day in New Zealand, and moves around the globe as the business day begins in each financial centre, first to Tokyo, then London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.