“A spot trade is a foreign currency exchange for immediate delivery, settled “on the spot” as opposed to a future date.”
— James Bennett - Senior Partner.
For immediate currency purchases, at the price available at the time of quoting. An exchange rate is agreed between you and your dealer and the currency is purchased on your behalf.
A maturity date is agreed for when you require your funds to be transferred. Aston Currency Management will transfer the funds to the desired account (the beneficiary) upon receipt of your payment.
We will keep you updated at every stage of your transfer with automatic e-mails confirming your trade, when your funds have been received and when they are then transferred to the beneficiary. A SWIFT message (MT103) can be produced on request. This transaction type is ideal for clients wanting to make immediate payments and may assist in them taking advantage of improved exchange rates.
“This is the purchase of currency that allows you to fix an exchange rate to be used at a date in the future, anywhere from 1 week to 2 years.”
— Liam Alexander, Partner.
Forward contracts are especially useful for businesses as they allow clients to avoid risk by protecting against currency fluctuations, along with providing a fixed price to assist with budgeting and the protection of profit margins. There are two main types of Forward Contract :·
A fixed forward defines a single future date to transact the full amount of currency bought or sold Locking in an existing rate to be used at a later date hedges any risk of market downturn, avoiding potential losses that can occur within the time frame of the forward contract.
Once the forward contract is agreed, the rate does not change if the market moves against you or in your favour.
An open forward allows you to “draw down” any increment/s of the full amount of funds bought or sold up until the expiry date of the booking, giving you more flexibility and control with your money.
“A Market Order utilises the time you have to buy your currency to try and achieve a better exchange rate than the current interbank market rate.”
— David McNeill, Head of Trading.
If there is a particular exchange rate you are looking to achieve and you have some time on your side, then you can take advantage of a Take Profit order. This allows you to set a rate that meets your needs. Automatic updates are issued at each stage of your trade.
As soon as your desired exchange rate is achieved, the currency is automatically purchased for you regardless of which time zone it occurs in. This allows you to access the global foreign currency exchange market and removes any confinement to UK currency market trading hours. Once purchased, your dealer will notify you to allow you to send in your settlement funds.
“A Stop Loss protects against adverse currency movements. It sets the lowest possible value or rate you will exchange at.”
— James Bennett - Senior Partner.
A Stop Loss order works in exactly the same way a Take Profit one does but offers you protection should the exchange rate start to move in the wrong direction for you.
You can set a Stop Loss order as an insurance tool, meaning that if the rate moves against you, you are guaranteed that a worst-case scenario rate is secured at a pre-agreed level so there is no risk of the rate getting any worse.
“OCO takes the best part of a Market or Limit Order and the benefit of a Stop Loss. Whichever is reached first automatically cancels the other.”
— Damien Lipman, Middle East Business Development.
This is a combination of a Take Profit order and a Stop Loss order. Whilst it can be seen as ideal to place a Take Profit order and try to achieve a rate better than the current market position, there is always a chance that it may not be achieved and the exchange rate could move against you.
The OCO trade allows you to set a best and worst case scenario and the rate is secured whichever level is achieved first.