Fundamentals of Foreign Exchange Trading
Course Info
Code IND09-103
Duration 5 Days
Format Classroom
Course Summary
This course provides you with a fundamental understanding of how Foreign Exchange (FX) markets function and the instruments used to trade successfully. You will learn about the types of FX transactions and how to manage them.
Exchange rates fluctuate, and to offset the volatiles in the market you will study risk management techniques. Specific attention will be given to hedging strategies, how to use Derivatives to reduce risk, and approaches specific to Options trading. In addition, to support a confident understanding of FX trading, the course includes a section on trading strategies and techniques.
- Understand the nature of Foreign Exchange (FX) markets and exchange rates.
- Describe the different types of FX transactions and how they are used.
- Explore the four types of Derivatives in detail: Futures, Options, Forwards, and Swaps.
- Analyse multiple strategies to manage risk in FX trading.
- Review tips and techniques for FX trading.
- Managers and Supervisors working with Foreign Exchange
- Professionals in Risk Management
- Derivative Traders
- Foreign Exchange Dealers
- Anyone looking to understand Foreign Exchange Trading
This course uses a variety of adult learning styles to aid full understanding and comprehension.
Participants will review case studies to highlight key areas of importance and possible areas for faults.
They will be supplied with the best tools required to carry out learning exercises to improve their skills. Participants will analyse the examples to gain a thorough understanding of how these skills, techniques and methods apply in the workplace.
Course Content & Outline
- Describe the different foreign exchange rate systems and their variants.
- Discuss market size and the types of FX transactions.
- Understand Forex/FX quotes.
- Distinguish between base and counter currencies.
- Differentiate between big figures and pips.
- Identify the factors that impact FX rates, including the Purchasing Power Parity and Interest Rate Parity theories.
- Describe the features of FX spot transactions including the spot FX rate.
- Discuss orders in spot trading and spot trading limits.
- Identify the types of derivatives and major derivative markets.
- Describe Future transactions and their key uses.
- Explain the impact of margins, market correlation, and ticks on Future transactions.
- Describe Options transactions in the context of FX trading.
- Differentiate between Call and Put Options.
- Understand the risk metrics that impact Options trading: Delta, Gamma, Theta, Vega, and Rho.
- Discuss the differences between European and American FX Options trading.
- Describe a forward exchange contract (FEC).
- Distinguish between a forward contract transaction and a forward rate agreement.
- Describe how to quote a forward contract transaction.
- Calculate a forward exchange rate and assess the costs and benefits.
- Examine premiums, discounts, and points in forward contract transactions.
- Discuss the features of non-deliverable forwards (NDFs).
- Describe the features of FX swap transactions.
- Analyse the advantages of using a swap transaction.
- Distinguish between outright forward transactions and swap transactions.
- Identify the top three exchange rate risks: transaction, translation, and economic.
- Measure and evaluate FX risk.
- Discuss Forward and Spot trading limits.
- Discuss managing risk with derivatives.
- Analyse hedging techniques for risk management:
- Internal hedging
- External hedging
- Forward Exchange Contracts (FECs)
- Assess the use, benefits, and risks of using Speculation, Arbitrage, and Securitisation.
- Understand the context of FX: The Six Forces.
- Analyse leading market indicators and their impacts.
- Describe FX forecasting methods.
- Examine the challenges within FX markets.
- Review tips and tricks for successful FX trading.
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