Frequently Asked Questions
1) What is Forex?
Forex, is a abbreviation of ‘Foreign Exchange’ words. Named İnternational Currency Market, allows to buy and sell countries’ currencies market called Forex. All across the World, countries passed by from fixed currency sysytem to floating sytem, this allowed to manage investment and trade risk opportunities in financial markets and helped creation of forex market.
2) How big is the Forex market?
Because of leverage opportunity an average daily trading volume exceeding $ 5,5 trillion, Forex market is the largest market of the world. For year 2015, there has been approximately 9,5 trilyon TL trading volume completed.
3) Which organization monitor Forex market in Turkey?
4) Who can open a Forex account?
5) Is there any low and high limit for transactions?
6) What are the advantages of Forex market?
Forex market offers a lot of advantages to investors. The main advantages are, high level of liquidity, chance to trade 5/24, risk management with hedge opportunity, two way trade opportunity, variety of products and because of leverage, with low deposit possibility of high income.
7) What are the disadvantages of Forex market?
8) İs everyone can trade in Forex market? Who should trade in this market?
Whoever has no restriction to open an investment account can trade in this market. Because of price movements change quickly and it is a leveraged market, it is better to trade whoever can turn into these features to profit in Forex market.
9) How can someone be prepare his/herself, if wants to trade in this market?
Specially, it is better for someone to learn about the platform that is going to use and know details about the market, lost/profit ratio, deposit and risk perception and generate his/her strategies in this direction.
10) What kind of things someone has to be careful about, when selecting a broker?
Forex market is monitoring by Capital Markets Board of Turkey (CMB). First of all, it is important to chose a broker who has a required licenses. Broker’s technological structure is also crucial, quick, reliable order transmission will give confidence to investors. Nevertheless, reachability, trainning comprehension and advantages that provided are come into prominence.
11) What is Leverage?
Leverage allows investors to open a transaction in larger sizes system. İn this way, with small deposit investors can open a larger size of transactions. Maximum allowed leverage ratio by Capital Markets Board of Turkey (CMB) is 100:1 in Turkey.
12) What is the leverage ratio in Forex market, in Turkey?
Who is İnitial margin is over 20,000 TL or equel currency amount accounts; in EURUSD, USDTRY, EURTRY and Gold products use 100:1 in other products leverage is maximum 50:1 practices. Under 20,000 TL balances in EURUSD, USDTRY, EURTRY and Gold products use 50:1 in other products leverage is maximum 25:1 practices.
13) What is the leverage ratio in global markets?
Leverage ratios varies in different countries. At the present time, there are markets that is 500:1 leverage ratio.
14) Can you give an exampla for leverage transaction?
When open a position, USD/TRY as represented in the market price of 2.90, 1 lot long (buy) 100:1 leverage with 1 lot of $1000 that showed at the margin $100,000 size of the position to be treated as $100,000. TL equivalent of your investment will be £ 290,000. When the market price go up to 2.95 with $1000 marjin $100,000 investment provision will 295.000 TL. For this transaction required marjin is only $1,000, for related provision the earning will be $ 5,000.
15) What need to be pay attantion in leveraged transactions?
16) With the last circular, what kind of changes were made to leverage ratio?
17) What is margin?
Value should be in accout to open a new position.
18) What is free marjin?
We deduct for open position used margin from initial martin to get free margin, it is the value that has to be in an account to open a new position.
19) What is margin call?
Margin call accours when the assets goes under the used margin. When this value come under firm’s determined level of stop level, open positions will be automatically closed starding from the most losing positions.
20) How much margin needed to start trading?
In general, the required minimum margin for open a position must have in your account. The amount to begin transaction has to be considered by balance, margin ratio and leverage.
21) Is there a certain time for trading?
As long as the forex market is open for the instrument that wanted to trade, 5/24 transactions can be send to the system. You can send your transactions by personel computers, smart phones, tablets and calling our head office.
22) Is the trade times are the same between Turkey and the global markets?
Trading hours is 5/24 in Turkey. Because of time difference, market might closed at 11:00 P.M. on Fridays.
23) Where is deposit stored in Forex?
Client’s deposit is stored in Takasbank, as a personel sub-account under brokerage firms account. You can access your personel account information from the E-Devlet application https://www.turkiye.gov.tr/ .
24) Which instruments is prefered in the World?
Although differ from country to country, major currencies come into prominence for instrument preference. URUSD, GBPUSD, USDJPY, Gold and Oil are the most traded instruments all around the World.
25) Which instruments is prefered in Turkey?
When we take a close look for traders instrument choice in Turkey, EURUSD, USDTRY and Gold come into prominence.
26) How can brokerage firms earn income from forex trading?
Brokerage firms earn their ıncome only from spread rates that they offer to their clients.
27) What happens if the open positions remain the next day?
When the open position remain for the next day there will be a swap profit or loss. The next day swap cost will be reflected to client’s accounts. The swap cost or gain depends of which instruments has been traded.
28) What is Parity, Spread, Pip and Point?
Parity: Is the ratio between the currencies of different countries. The first currency called base and the second currency called opposite currency.
Spread: Is the difference between buy and sell price.
Pip: Is the forth decimal value indicating the size of the instant price changes in exchange rates.
Point: Is the fifth decimal value indicating the size of the instant price changes in exchange rates.
29) What is swap?
Swap is the interest rates difference between base and opposite currencies that reflected to client’s account. It calculated overnight and transferred to client’s accounts at 00:00.
30) What are the order types in the forex market?
Market provides a chance to transact orders with different types of orders. You can use market orders, buy stop, sell stop, buy limit, sell limit, take profit and stop loss to transact. In addition to this, you can also use trailing orders.
31) In which instrument can be transact in this market?
32) What is the level of risk in the Forex market? How can I minimize the risks?
Forex market is sensative to any news flow, treated using leverage 5/24. Under these conditions, it is essencial to follow news and data flow closely, leverage ratio should be set right. If necessary, take profit/stop loss orders must be used to relatively minimize the risk.
33) What kind of progress is showed in Turkey for Forex market?
When we consider forex market since 2011, there was a rapid growth in the number of brokarege firms and employment. In addition to this, the number of investors and trading volume has also increased at the same rate. Specially, with the goal of being a financial center in our country, as part of training and Financial Literacy increased the number of conscious investors, it is expected to continue interest in the Forex market.
34) What is the cost of commissions in Forex trading?
There are no commissions in Forex trading. In stock market, where, there are commissions fee and spread cost, there is only a spread cost in forex market.
35) What are the margins types used in the trading transactions?
There are 3 different types of margin;
Transactions margin: it is the minimum deposit amount that has to be in an account to open a transaction.
Free margin: it is the deposit that has to be in an account after opening transaction, at the same time, it is a margin that profit and loss amount are added or deleted.
Used margin: it is the type of margin that is blocked for continuation of open taransactions by brokarege firms.
36) What is the buying price? What is the selling price?
Buying price, indicates the price at which the investor can sell.
Selling price indicates the price at which investors can purchase.
37) What is a lot?
Transaction unit called for lot in the Forex market.
38) “Market Order” what does it mean?
It is a instant buy and sell orders that have occurred in the market.
39) What do “Buy Stop” “Sell Stop” “Buy Limit” “Sell Limit” mean?
Buy Stop: is the type of order that allows to buy at a price greater that the current price.
Sell Stop: is the type of order that allows to sell at a price lower that the current price.
Buy Limit: is the type of order that allows to buy at a price lower that the current price.
Sell Limit: is the type of order that allows to sell at a price greater that the current price.
40) What do “Take Profit” “Stop Loss” mean?
Take Profit: is the type of order that allows to close an open positions when it comes to a predetermined price level and take profit.
Stop Loss: is the type of order that allows to close an open positions when it comes to a predetermined price level and stop further loss.
41) If I do not close open positions at the end of the day, what kind of risk I might have?
You can carry on your open positions long-term in the Forex market. To take into consideration, when you are not following your open positions in a specific time frame, there would be a economic development which might cause excessive price movements and depending on instruments swap ratio cost.
42) What does it means to take a long position in any product?
It means a buy position. When the investors estimate increase on relevant market price open a long position. For example, if the investor expect Euro to increase in value againt Dollar, he/she open a long position on EURUSD parity to make a profit.
43) What does it means to take a short position in any product?
It means a sell position. When the investors estimate decrease on relevant market price open a short position. For example, if the investor expect Euro to decrease in value againt Dollar, he/she open a short position on EURUSD parity to make a profit.
44) How can I close an open position in Forex market?
The long position with short, the short position with long is not closed in Forex market. After opened a short or long position, positions closed by using “close” button it order window to end transactions.
45) Can you give us a transaction example about a Turkish Lira is going up in USDTRY parity?
Suppose we open 1 lot long position in USDTRY parity. Let us assume that the parity rose to 2.91 level after buying 1 lot at 2.90 parity level. In case, it consists of 100 pips and a profit of 10 TL is obtained for each pip movement.
Profit= 10 X 100= 1,000 TL
46) Is Forex trading taxable? Whose responsibility is to prepare tax returns?
Income derived in Forex tarding is subject to tax. Proceeds from this transaction is not subject to declaration under provisional article 67 of tax code, it is subject to personel declaration. Notification of the declaration prepared under the responsibility of the investors.
47) What are the differences of the stock and Forex market?
First of all, Stock markets are institutional structures with a physical center. On the other hand, Forex market works as a over the counter (OTC) does not have a physical center. The other differences are as follows; Forex market trading hours is 5/24, Stock market hours takes place at a certain time. Leverage ratio is 1:1 in Stock market but maximum 100:1 in Forex market in Turkey. In addition to this, Forex market has no limitation for two-way (Bidirectional) transactions, in the Stock market there only be short selling for certain shares. Furthermore, Because of high liquidity, Forex market did not give opportunity for manipulation, Stock market may contain such risk. Finally, there is a physical delivery in Stock market, in Forex it is targeted to make profit by selling and buying the currencies, in this way, market is differentiated by the intended markets.
48) What should investors pay attantion about?
At first, you should determine the correct leverage ratio. High leverage ratio gives high profit opportunuty but contain risk at the same time, it is essential to determine right strategy. It is important to have a understanding about the insturuments and have a experience in what conditions price goes up or down can increase the number of successful transactions. To have detailed information on the use of take profit and stop loss orders is also important. Before starting the real transactions, get extensive traininig about MT4 platform, fundamental and tecnical analysis and managing open positions in a specific disipline is essencial for successful trading. You can call your client represantative for more information.
49 ) Do you have any Forex traning?
As AHL Forex, we assist and raise awareness of our existing and potential investors with various trainings. In this line of thinking, we share seminar, webinar, video analysis, periodic bulletins and over all market expectations, reports, reviews. Also, by connecting to a personel computers with remote access, organize office seminars and if there is a request, we visit investors adresses of the residence and provide services to our clients.
50) Will you organize Forex seminars?
As AHL Forex, we believe in the importance of meeting with investors face to face and introducing our company and the market. In this line of thinking, we want to organize seminars in various cities of Turkey and extend financial literacy to contribute Forex sector. We will share the schedule about which cities and what dates we organize the seminars and announce in our web page.