WHERE IS THE CENTRAL LOCATION OF THE FX MARKET?

FX Trading is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over the Counter (OTC) or “Interbank” market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.

WHO ARE THE PARTICIPANTS IN THE FX MARKET?

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.

WHEN IS THE FX MARKET OPEN FOR TRADING?

A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, 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.

WHAT ARE THE MOST COMMONLY TRADED CURRENCIES IN THE FX MARKETS?

The most often 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 US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and the Australian Dollar.

WHAT DOES IT MEAN HAVE A “LONG” OR “SHORT" POSITION?

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.

WHAT IS THE DIFFERENCE BETWEEN LIQUIDITY AND VOLATILITY?

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. With a daily trading volume that is 50x larger than the New York Stock Exchange, there are always broker/dealers willing to buy or sell currencies in the FX markets, thereby assuring liquidity.

HOW ARE CURRENCY PRICES DETERMINED?

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.

HOW DO WE MANAGE RISK?

The most common risk management tools in trading strategies 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 order and stop loss orders can be easily executed.  Additionally, we always use maximum drawdown algorithms to ensure proper risk management.

WHAT KIND OF TRADING STRATEGY DO WE USE?

Our traders make decisions using both technical factors and economic fundamentals. Technical traders use charts, trend lines, support and resistance levels, 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 rumor.  The most dramatic price movements however, occur when unexpected events happen. The event can range from a Central Bank 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.  Predominantly, our trading strategies are derived from decades of experience in the trading pits of Chicago and on Wall Street in New York.

HOW OFTEN ARE TRADES MADE?

Market conditions dictate trading activity on any given day. As a reference, the average number of trades that occur in a day range from as low as 1 to as many as 10 trades a day. Most importantly, as there are no commissions charged, our managers take positions as often as necessary without worrying about any transaction costs.

HOW LONG ARE POSITIONS MAINTAINED?

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; 3) another action occurs that causes the manager to close out the position.

WHAT ARE YOUR COMMISSIONS AND FEES?

Chicago Trading & Investments, LLC charges no fees for account management, trades, or withdrawal.  Chicago Trading & Investments, LLC deducts 20% of trading profits from all accounts as the management fee.  All investment decisions are made by our professional traders and managers, aligning our goals with that of our clients. 

HOW DO I WITHDRAW MONEY FROM MY ACCOUNT?

To withdraw money from your account, you must fill out and submit a withdrawal request form. Funds may be withdrawn by the signatory of the trading agreement alone. If it is a joint account, then both account holders must sign the withdrawal request. No third party payments are allowed. Additionally, funds may be withdrawn by Check only if the account holder resides in the United States or Canada.