Important notice :Due to the recent situation in Hong Kong, please be aware that our services may be affected at times. Please refer to our website for latest announcements and updates.

What is Swap Point | Pips of Leveraged FX | Rakuten Securities HK

In leveraged FX, there are 2 types of possible income sources. One is possible capital gain by trade, so tight spread (less pips between the prices) is important. The other is swap point, which is known as rollover interest.

Basic concept of swap point and pips in leveraged FX

A forex swap comprises of two transactions, a spot forex transaction, and a forward forex transaction. These two transactions are performed at the same time for the same quantity and therefore counterbalance each other. The swap point specifies the difference between the spot rate and the forward rate. It is also known as pips.

A forex swap allows the investor to acquire currencies instantaneously and then sell them at a price which has been decided upon in the contract at the maturity date of the swap point.

One of the key reasons why people are so fascinated with trading in forex as compared to other financial instruments is that with forex, they have the chances of getting much higher leveraged FX than they would make with stocks. While you might have heard the term leveraged FX a number of times, do you know what its meaning is and how it works?

Swap Point or Pips

A regular forex account has definite lots and pips units. A lot can be defined as the minimum quantity of a security that could be traded. On the other hand, pips is the lowest amount by which a currency quote can vary. Normally, one lot is valued at $100,000, and a pips unit is quantified in the amount of $0.0001 for the currency pairs with U.S. dollar.

Pips value is the impact that a one-pip adjustment has on an amount of dollars. It is significant to see that the pips value does not change depending on the amount of leveraged FX used. Instead, the leveraged FX amount you have moves the pips value. Many brokers provide traders a 100:1 leverage. It means that for every $100,000 transaction, the broker will need you to have at least $1,000 in your account.

The monetary worth of each pip is determined by three main factors including the currency pair that is being traded, the scope and size of the trade, and the exchange rate. Depending on these factors, the variation of even a single pip can have a substantial impact on the value of the open position.

When you increase your leveraged FX, it also increases the volatility and unpredictability of your position because even the smallest changes in pips value can result in larger variations in your account value.

Rakuten Securities HK

Rakuten Securities HK is one of the largest forex brokers in the world and an innovator in leverage FX market trading in Hong Kong.

With the advantage of great financial capability and leading-edge technology, Rakuten Securities HK offers a high-quality online forex trading platform, Rakuten FX. It offers speedy performance, execution, interactive layout, and cutting-edge analysis tools.

Why swap point or pip is used

A pip is a unit which is used for quoting price changes and calculating profit or loss in the Forex market. Rakuten Securities HK quotes most of the currency pairs to five decimal places. The fourth place after the decimal point is usually watched out to count pips. For currency pairs related to Japanese Yen, prices are estimated up to 3 decimal places, although the second place after the decimal point is usually considered to calculate pips. Each point that place moves is regarded as 1 pip of movement.

Rakuten Securities Hong Kong office is straight forwardly accessible to the public and offers a friendly atmosphere to anyone who wants to discover the world of forex trading. Their expert forex consultants are always prepared to provide you with aiming trading demonstrations of their online trading platform.


Powered by hong kong seo company - You Find Limited

Basic Concepts

Learning to trade in a new market is like learning to speak a new language. It’s easier when you have a good vocabulary and understand some basic ideas and concepts. So let’s start with the basics of forex trading

 

CURRENCY SYMBOLS

3-letter symbols are commonly used to denote currencies such as USD for the US dollar and EUR for the Euro.

 

CURRENCY SYMBOL CURRENCY SYMBOL
US dollar USD Canadian Dollar CAD
European Euro EUR Australian Dollar AUD
British Pound GBP New Zealand Dollar NZD
Japanese Yen JPY Norwegian Krone NOK
Swiss Franc CHF Hong Kong Dollar HKD
Chinese Yuan CNH Mexican Peso MXN
Swedish Krona SEK Turkish Lira TRY
South African Rand ZAR Singaporean Dollar SGD

 

CURRENCY PAIRS

Currencies are quoted in pairs, such as EUR/USD or USD/JPY. The first listed currency is known as the base currency, while the second is called the counter or quote currency. The base currency is the “basis” for the buy or the sell.

 

Example
If you BUY or “GO LONG ON” EUR/USD you buy Euros (and simultaneously sell dollars). You would do so in expectation that the euro will appreciate (go up) relative to the US dollar. On the other hand if you thought that there were reasons that demand for dollars would rise compared to the Euro you would SELL or ‘SHORT” EUR/USD (selling Euros for dollars).

 

PRICE QUOTE

Forex is quoted in pairs, how much one unit of the base (first listed) currency is worth in counter/ quote (second listed) currency.

 

Example
 The EUR/USD at 1.1699 shows how much one euro (EUR) is worth in us dollars (USD). Therefore, 1 EUR = 1.1699 USD

 

LOT SIZE

A lot is the smallest trade size available. Rakuten Securities HK accounts have a lot size of 1K (1,000) units of currency. Account holders can however place trades of different sizes, so long as they are in increments of 1K units like, 2K, 3K, 15K, 112K etc.

Example: Spread of EUR/USD is
0.7 pips which is 0.00007 USD.

SPREADS

Just like in all markets, there are two prices- buy and sell, for every currency pair. The difference between the buy price and sell price is the spread, or the cost of the trade. An example on the left, the spread is 0.7. On a Rakuten Securities HK 1K lot size USD-denominated account, a pip on the EUR/USD currency pair is worth US$0.1.

 

PIP

A pip is the unit used for price quotation change and counting profit or loss in Forex market. In Rakuten Securities HK, most currency pairs are quoted to five decimal places, the fourth spot after the decimal point (at one 100th of a cent) is typically what one watches to count “pips”. For Japanese Yen-related currency pairs, prices are quoted to 3 decimal places, whereas the second spot after the decimal point (a cent of yen) is what one watches to count “pips”. Every point that place moves is 1 pip of movement.

Example
EUR/USD rises from 1.16997 to 1.17007, the EUR/USD has risen 1 pips.

USD/JPY drops from 110.200 to 110.145, the USD/JPY has dropped 5.5 pips.

 

LEVERAGE AND MARGIN

At Rakuten Securities HK, leverage of 20:1 allows you to trade with $1,000 in the market by setting aside only $50 as a security deposit. All trades are executed using borrowed money. This allows you to take advantage of leverage. This means that you can take advantage of even the smallest movements in currencies by controlling more money in the market than you have in your account. On the other hand, leverage can significantly increase your losses. Trading foreign exchange with any level of leverage may not be suitable for all investors.

The specific amount that you are required to put aside to hold a position is referred to as your margin requirement. Margin can be thought of as a good faith deposit required to maintain open positions. This is not a fee or a transaction cost, it is simply a portion of your account equity set aside and allocated as a margin deposit.

 

 

In short, the leverage ratio is determined by the % of margin requirement as you use margin to create leverage.

 

ROLLOVER INTEREST

Traders holding positions for more than one day will receive or pay the interest difference between the two currencies in the pair they are trading. Though daily interest is tiny, leverage* can make this interest significant.

 

* Without proper risk management, this high degree of leverage can lead to large losses as well as gains.

 

Register a Rakuten FX Trading Platform Demo

*Required Fields

I acknowledge that Rakuten Securities HK may contact me by phone, mobile messenger or e-mail with information on Rakuten Securities HK's products, services, promotional offers and trading education, and assist me in using the forex online trading platform.

Although demo accounts attempt to replicate real-time market scenarios, they are based on simulated market environment. As such, there are key differences that distinguish it from a live account; including but not limited to, the lack of dependence on real-time market liquidity, delay or difference in pricing and spread. The operational capabilities when executing orders in a demo environment may result in atypically expedited transactions, lack of rejected orders, and/or the absence of slippage. Additionally, updates to demo account may not coincide with those of live accounts.

^ Rakuten Securities was ranked as the world’s fifth largest retail forex broker by volume in August 2017 from Finance Magnates.
Ŧ Only available for clients who hold a Rakuten FX account.
¤ Fixed spreads are offered in Rakuten FX account during at least 95% of the time of the monthly core-time trading period (8am to 2am HKT of every trading day). Spreads shown above and in our website are for reference only and are not guaranteed and may widen beyond the average spreads depending on the market volatility, especially under circumstances of extremely low liquidity, news events or public holidays. Please always refer to the trading platforms for the most updated spreads.
ɞ Order execution rate is calculated based on the AS Streaming and Streaming trading orders in 10k or less order size with lower than 1 pip slippage setting in which were executed during the period between Jan 1 to Nov 1, 2017.
§ Rakuten Securities HK offers Trading Station platform through its partner FXCM.
Commission is charged per trade side on both open trade(s) and close trade(s). All commission fees may be subject to change from time to time without prior notice. Please always refer to the most updated Schedule of Standard Fees and Charges.
ʊ MARKETSPEED FX platform is the winner of “Online Forex Trading Platform” by Good Design Award in 2012.

To safeguard your trading account(s), you are highly recommended to set a strong password and change it regularly.

When executing customers’ trades, Rakuten Securities HK can be compensated in several ways, which include, but are not limited to: charging fixed lot-based commissions at the open and close of a trade, adding a markup to the spreads, acting as a counterparty in the transactions. As a result, Rakuten Securities HK’s interests may be in conflict with yours.

Rakuten Securities Hong Kong Limited (“Rakuten Securities HK” SFC CE Number: AIM232) is a wholly owned subsidiary of Rakuten Securities, Inc. (*) Rakuten Securities, Inc., one of the major online brokers in Japan, founded in 1999, is a subsidiary of Rakuten, Inc. (TOKYO: 4755).
The risk of loss in leveraged foreign exchange trading can be substantial. You may not be suitable as you may sustain losses in excess of your initial margin funds. Leverage can work against you. Placing contingent orders, such as “stop-loss” or “stop-limit” orders, will not necessarily limit losses to the intended amounts. Market conditions may make it impossible to execute such orders. You may be called upon at short notice to deposit additional margin funds. If the required funds are not provided within the prescribed time, your position may be liquidated. You will remain liable for any resulting deficit in your account. You should therefore carefully consider whether such trading is suitable in light of your own financial position and investment objectives. Do not speculate with capital that you cannot afford to lose. If you decide to trade products offered by Rakuten Securities HK, you must read and understand the information and disclosure provided by Rakuten Securities HK. Rakuten Securities HK may provide general commentary which is not intended as investment advice and must not be construed as such. Seek advice from a separate financial advisor. Rakuten Securities HK and Rakuten Group assumes no liability for errors, inaccuracies or omissions; does not warrant the accuracy, completeness of information, text, graphics, links or other items contained within these materials. Read and understand the Terms and Conditions on Rakuten Securities HK’s website prior to taking further action.
Information Security on Internet: To protect your privacy, do not access your trading account via public or shared computer or save your password locally in any computer or mobile device after logging in. Rakuten Securities HK will never ask you to send any of your personal information such as account number and password to us directly via e-mails.
(*)Company Registration ID (in Japan): Kanto Local Finance Bureau (Financial Instruments Firms) No.195