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What is Forex and Forex Trade?
Forex stands for "Foreign Exchange". Its trade involves buying and selling currencies in the form of pairs. Key participants include Central Banks, Financial Institutions, Multi-nationals and Currency Speculators. Currency pair prices are highly sensitive to Economic Data and Political developments.
How does Forex trading work?
At PMEX, Forex is traded in currency pairs. You are effectively comparing one currency with another. For example, the EUR/USD at 1.4022 shows how much one euro (EUR) is worth in US Dollar (USD) terms. A total of 16 currency pairs is tradable thru PMEX which are EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CAD, USD/CHF, EUR/GBP, EUR/JPY, GBP/JPY, CHF/JPY, AUD/JPY, EUR/CAD, EUR/AUD, EUR/CHF, GBP/CHF & AUD/CAD. PMEX provides a secure and legitimate platform to trade all major currencies with confidence.
What are the Market trading hours?
Two timings are observed, depending on whether Daylight Savings are being observed in USA or not.
Daylight Savings Timings (Mar to Oct):-
On Monday, the market opens earlier at 3 A.M and remains open till 2 A.M.
From Tuesday morning through Friday night, the market opens at 5 A.M and closes at 2 A.M.
Routine Timings (Nov to Feb):-
On Monday, the market opens earlier at 4 A.M and remains open till 3 A.M.
From Tuesday morning through Friday night, the market opens at 6 A.M and closes at 3 A.M.
The only exception are Intl Agri products in which trading starts as per above schedule, but the market closes earlier at 12 midnight.
What is Leverage?
Leverage amplifies / increases your purchasing power. PMEX provides a leverage of up to 20 times at no cost. This means that with a deposit of Rs.0.1 Million, you can trade contracts worth Rs.2.0 Million. The ratio of leverage is determined by P.M.E.X and varies across commodities. This allows traders to take positions far exceeding their invested capital. However, as the leverage increases, so does the risk. Leverage is a double-edged weapon and must be used with extreme caution.
What is Spread?
Spread is the difference between the BUY / BID price and the SELL / ASK price of any commodity. For example, if Gold is trading at 1164.30 (buy/bid) and 1164.60 (sell/ask) US $ per ounce, then we will say that the spread in gold is 30 cents.
What does going "long" and "short" mean?
Going "long" is when a trader buys any commodity, expecting its value to rise. Going "short" is when a trader sells any commodity in advance (without having it in the first place), expecting the price to decline. Short or short selling is officially allowed and it enables traders to make a profit even when the price of a commodity is on downtrend.
How are prices determined?
Economic, financial and political conditions mainly affect the value of a commodity. Additional factors are interest rates, inflation and supply n demand.
Are orders executed even when the market is closed?
No, PMEX does not execute orders during off-hours.
Is the Commodity and Forex market liquid?
The commodity and foreign exchange market is among the biggest and most liquid financial markets in the world, with traded value in Billions of US Dollars per day. This makes it typically very easy to get in and out of trades any time, even in large volumes.
Ample buyers and sellers are also ensured in the form of Market Maker by PMEX to facilitate traders in entry and exit from the market at every rate. The Market Maker shadows the International price of the commodity / currency pair in real-time.
Are there returns on Idle Funds?
PMEX has discontinued interest on idle funds since 1 Mar, 2018.
What is the account opening procedure?
First Step is the client's Biometric Verification. For this purpose, the client will have to visit our premises once. Remote Biometric Verification is also available in the cities of Karachi, Lahore and Islamabad. For remote biometrics, you will have to obtain an Authority Letter from Us.
Then, account opening form can be downloaded from our website, obtained from our office or received via courier upon request. Fill and sign each page of the form, sign the risk disclosure document, commission structure and general guidelines, then attach a valid copy of your and nominee's (N.O.K) CNIC.
You will also fill the NCCPL's Know Your Customer (KYC) form for individuals, which is available in the downloads section of our website. Please attach all applicable supporting documents with this form.
Trading account would be operational within 2-3 business days.
Is there a minimum amount with which to open an account?
Minimum recommended account size is Rs.50,000. Ideal account size is between Rs.100,000 to 300,000 for the initial 3-5 weeks of Live Trading. As soon as you attain sufficient experience, the account size can be enhanced to any level.
How do I deposit funds to my trading account?
You will transfer Funds / Initial Margin directly to PMEX using the Automated Direct Funds Model (ADFM), whose details are available in the Downloads section of our website.
Here is the link to a video guide on ADFM, on our Official You Tube Channel.
Does Nachfolger provide any assistance in trading?
Based on the past trend, active clients shall receive an email daily, outlining major buying and selling points for actively traded commodities and currencies. Please note that this is merely a guideline and investors shall trade entirely on their own risk.
Telephonic guidelines may also be received from us at 0332-9609919 (what's app active) during working hours (Mon to Fri; 11 A.M to 5 P.M).
How do I withdraw funds?
You will place a funds withdrawal request by logging into your "Client Portal". When your withdrawal request has been approved by Nachfolger (max 1 day), PMEX will directly credit the withdrawal amount to your "Client Profile" approved designated bank account, within 2 banking days.
However, payment requests to third parties and any bank account other than your "Client Profile" approved bank account are not entertained.
What is the process of conversion from USD to PKR?
Rates are quoted on PMEX mostly in USD or other foreign currencies in case of Forex pairs (where USD is not involved). At the point of trade or when taking positions, the USD is converted to and from PKR. The applied conversion rate is State Bank of Pakistan's Mark-to-Market Revaluation Exchange rate for the previous day. This rate is published daily on SBP website for all major foreign currencies.
What is a bullish and bearish market?
A bullish market is characterized by rising / spiking prices. On the contrary, when the price is declining in the market, it is said to be in bearish state. Both terms are unique to commodities and equity markets and are used solely to depict the price trend.
What is meant by short selling?
This trade is conducted opposite to a buying entry. If a trader feels that the price of a commodity is likely to decline, the exchange permits him to sell that commodity in advance without having it. If his assessment proves correct and the price does decline, he purchases back the sold commodity at a price lower than the sale price. This difference in the sale and purchase price becomes the trader's profit. Market moves as a result of a constant struggle between these buyers and sellers.
What is meant by G.T.C?
G.T.C stands for Good Till Cancelled. Unlike a conventional order that is valid only for the day, this order (buy or sell) remains valid either till execution, cancellation or contract expiry. This type of order is independent of trading day.
What is Nachfolger's Commission structure?
We have designed a very competitive commission structure for our clients. Commission is charged on both sides of the trade; buy and sell. Commission is charged irrespective of whether the trade results in profit or loss.
Are there any charges for opening an Account?
There are no charges for opening a trading account with Nachfolger. Further, we do not charge any account maintenance charges from our clients whatsoever.
How is trading at PMEX better than Stock Exchange (PSX) ?
Pakistan's stock exchange is highly prone to manipulation by a handful of high net worth individuals and financial institutions. On the contrary, PMEX is integrated in real-time with the International Commodities and Forex market, where daily traded value is in Trillions of US Dollars, that is immune from various forms of uncertainties in Pakistan.
After I transfer funds, when can I trade?
If you transfer funds online to PMEX bank account within banking hrs (9 AM to 5 PM), the amount will be allocated to your trading account on the same day. It normally takes about 30-60 minutes.
In case you transfer funds to PMEX bank account after banking hrs, the amount may be allocated to your trading account on the following banking day.
If you use cheque as the mode of deposit, funds will be credited to your trading account after the cheque has been cleared from your bank account and the funds have been received in PMEX designated bank.
What is the guarantee that my funds will not be misused?
Under the Direct Funds Model, the role of broker in receiving or disbursing your funds has been fully excluded. Now, you will deposit Initial Margin directly in a PMEX bank account. Similarly, your withdrawals will be credited by PMEX directly to your designated bank account specified in "Client Profile".
You have round the clock access to your General Ledger (GL), which is accessible via Client Portal. It contains the details of every deposit and withdrawal / deduction from your trading account, along with account head.
What charges do I pay upon trading?
All charges become due only once you execute a trade in your account. This is the break-up of charges:-
Every client has 24/7 access to his trading account's General Ledger (GL) via Client Portal. Your GL will contain a head wise detail of all the charges deducted from your trading account.
How long can I carry my position and are there any charges?
Position in any contract can be held till its pre-defined expiry date. There are no charges for carrying the position over to the next working day, or any number of days. However, once you switch your position from one contract to the other, then charges would apply. This generally happens when a trader switches the position from an expiring contact to the freshly opened contract.
How is commission charged?
P.M.E.X Fee and Nachfolger commission are charged per lot and on both sides of the trade, i.e buying and selling in Rs. However, it is irrespective of number of days the position is held. These charges remain unchanged, even if the position is squared / closed on the same day. Commission is charged regardless of whether the trade resulted in profit or loss.
Can I trade US Equity Indices through PMEX?
3 US Equity Indices which include DOW Jones Industrial Aveage (DJIA), Standard and Poor's 500 (S&P 500) and NASDAQ 100 can be traded through P.M.E.X. This is an excellent opportunity for local stock traders as US equity indices are far more reliable than the local stock exchange (PSX).
What is "Bid" and "Ask"?
."Bid" represents the price at which a buyer is readily available in the market. When we are selling some contract, we will consider the bid price.
"Ask" is the price at which the lowest seller is readily selling the commodity in the market. When we are buying a commodity, we shall consider the ask price.
To sell, consider the bid price and to buy, always consider the ask price is the rule of thumb. A trader is not bound to execute his trade on the prevailing price; he may specify a price of his own liking which is known as a Limit type order.
How are commodities and currencies traded at P.M.E.X?
All commodities and currencies are traded in the form of Contracts which are regulated directly by P.M.E.X. Traders trade in contracts in the form of Lots. Minimum lot size for the contract of any commodity / currency pair is 1. Each contract has a pre-defined expiry date. When the current contract of any commodity is nearing expiry, a parallel new contract for the same commodity is opened by P.M.E.X. This enables traders to easily shift their position from expiring contract to the fresh contract; if they desire so.
How do I shift over my position from an expiring contract?
You will simply square / close your position in expiring contract and take a fresh position in the newly opened contract. It is entirely upon the trader's own discretion whether he wants to roll over the position to the next contract or otherwise.
What if I can't square my position in an expiring contract?
On the last day of a contract's expiry, each trader has till 4:00 PM to square the position, failing which the position (long or short) is self liquidated at a universal "settlement price" determined by P.M.E.X. This price is generally close to the price prevailing around the closing time of 4 PM.
Will my trading account be maintained in Pak Rs.?
Your trading account shall be entirely opened and maintained in Pak Rs. All deductions from your account such as Fees and Commission shall also be in Pak Rs. Your trading however, shall take place in USD as international prices of most commodities are quoted in USD.
What is the validity period for any contract?
It varies with each commodity but is predefined for the convenience of traders. It generally ranges b/w 4 - 8 - 12 weeks, depending on the commodity.
How do I gain preliminary knowledge of futures trading?
For your convenience, we have a You Tube channel by the name of Nachfolger (Pvt.) Ltd. It contains a wide range of informative and instructional videos that not only educate you about futures trading but also explain trading strategies along with Do's & Don'ts of this business. Link to our channel is available on the website's homepage.
Can I manage my Trading Account via Smartphone?
Yes, PMEX has introduced a state of the art international trading platform known as Meta Trader 5 or MT5. This platform enables traders to fully manage their accounts across PCs, Smartphones and Tablets (Android and iOS based). MT-5 has a host of technical indicators that can be implemented on commodities / currencies / indices to maximize gains and manage risks.
What is Initial Margin?
Initial Margin is the nominal sum (3-8%) in Rs. of the contract's total value that is required in advance to open a position in that contract of any commodity. It varies across commodities and is determined / revised by PMEX from time to time. Futures trading in commodities is conducted on margin and it is an international practice.
What are the major Price Trends?
The 3 major price trends are:-
1. Uptrend:- When both the highs and lows of the commodity price are consistently increasing / rising.
2. Downtrend:- It is characterized by declining highs and lows with consistency.
3. Sideways:- Also known as range-bound or directionless trend. When the price consistently oscillates in a certain limited channel without clearly making new highs or breaching recent lows.
What is Stop Loss?
It is a built-in safety measure that enables a trader to timely exit an unfavorable trade. It caps your loss in any trade beyond the specified price threshold. It can be placed for both long and short positions. Trading with stop loss is strongly advised for all traders, especially newcomers.
What is the preferred road map to Live Trading?
Preliminary Study (F.A.Qs, Glossary and You Tube Channel Videos) → Live Account with 20-25% of your Total Planned Investment for 3-6 weeks → Evaluation of Performance → Feedback of Nachfolger → Enhance the Investment to the planned level as per recommendation.
What are the common mistakes of traders?
Traders tend to:- Use maximum allowed leverage (anywhere b/w 20-50 times of actual investment), overtrade, impulse trade, get influenced from other traders, trade purely on personal whims, avoid the use of technical indicators and repeat old mistakes.
We reiterate that trading is an evolutionary process in which traders constantly need to remain vigilant and improve their trading skills over time.
How much return can I expect on my investment?
With an investment of Rs.1 lac, without assuming too many risks, a net return of Rs.5-8 th can be generated per month (22 working days approx.). Actual return may vary depending on your trading temperament and risk preferences.
The rate of return on futures trading is directly proportional to RISK.
How many accounts can an individual open with the Broker?
Each individual can open and maintain 1 trading account with each PMEX broker. You can open a trading account with as many PMEX registered brokers as you may like.
What is Threshold / Auto-Liquidation Threshold?
At P.M.E.X, futures trading is done on margins. However, 100% of the Initial Margin (INMR) must be maintained by traders at all times. The auto liquidation threshold is 21% of the PMEX prescribed margin for any tradable item. Once a trade goes against you and the running balance / liquidity of your trading account falls to a level such that its near or equal to 21% of the PMEX defined margin, auto liquidation would be self triggered. As a result, all our open positions will be automatically liquidated without any prior notice.
What trading platform is being offered by PMEX?
PMEX has fully migrated to the Meta Trader 5 / MT5 trading platform. It is an internationally recognized trading platform which is fully compatible with these devices:-
You can simultaneously login to your trading account over any number of supported devices.
What features and benefits are offered by Meta Trader 5 Platform?
Meta Trader 5 / MT5 is a feature rich trading platform that has the following salient features:-
How can I trade in Forex and Commodities in a Legal and Secure way?
First of all, you should open your trading account only with a broker who is formally registered with Pakistan Mercantile Exchange (PMEX). Never make any deposit of funds directly to the broker, whether in the form of cash, online or cheque. Always deposit funds directly in the PMEX designated bank account only.
Never handover your investment to any such broker who promises you a fixed rate of return periodically, even if such broker is registered with PMEX.