Quoting Conventions

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. For example, if you BUY EUR/USD you have bought Euros (simultaneously sold Dollars). You would do so in expectation that the Euro will appreciate (go up) relative to the US Dollar.

AUD / USD

In this example Aussie is the base currency and thus the "basis" for the buy/sell. If you believe that the US economy will continue to weaken and this will hurt the US Dollar, you would execute a BUY AUD/USD order. By doing so you have bought AUD in the expectation that they will appreciate versus the US Dollar. If you believe that the US economy is strong and the AUD will weaken against the US Dollar you would execute a SELL AUD/USD order. By doing so you have sold Aussie in the expectation that they will depreciate versus the US Dollar.

USD / JPY

In this example the US Dollar is the base currency and thus the "basis" for the buy/sell. If you think that the Japanese government is going to weaken the Yen in order to help its export industry, you would execute a BUY USD/JPY order. By doing so you have bought U.S Dollars in the expectation that they will appreciate versus the Japanese Yen. If you believe that Japanese investors are pulling money out of U.S. financial markets and repatriating funds back to Japan, and this will hurt the US Dollar, you would execute a SELL USD/JPY order. By doing so you have sold U.S Dollars in the expectation that they will depreciate against the Japanese Yen.

GBP/USD

In this example the GBP is the base currency and thus the "basis" for the buy/sell. If you think the British economy will continue to be the leading economy among the G7 nations in terms of growth, thus buying the Pound, you would execute a BUY GBP/USD order. By doing so you have bought Pounds in the expectation that they will appreciate versus the US Dollar. If you believe the British are going to adopt the Euro and this will weaken Pounds as they devalue their currency in anticipation of the merge, you would execute a SELL GBP/USD order. By doing so you have sold Pounds in the expectation that they will depreciate against the US Dollar.

USD/CHF

In this example the USD is the base currency and thus the "basis" for the buy/sell. If you think the US Dollar is undervalued, you would execute a BUY USD/CHF order. By doing so you have bought US Dollars in the expectation that they will appreciate versus the Swiss Franc. If you believe that due to instability in the Middle East and in U.S. financial markets the Dollar will continue to weaken, you would execute a SELL USD/CHF order. By doing so you have sold US Dollars in the expectation that they will depreciate against the Swiss Franc.

Cross Rates

Other than the major currencies, MFGA also gives you access to also trade in cross rates. Cross rates are rates that are not quoted against the USD. Examples are EUR/AUD, AUD/JPY, AUD/NZD, AUD/GBP, EUR/JPY, EUR/CHF, EUR/GBP, GBP/CHF, GBP/JPY, NZD/JPY, NZD/CAD, etc., etc., etc. The combination possibilities are extensive and this enables our clients to take any trading opportunities as they arise.

Buying / Selling

First, the trader should determine whether they want to buy or sell. If they want to enter a short order – whereby they will profit if the exchange rate falls. The opposite holds true for traders who enter buy orders, profiting if the exchange rate goes up.

Dealing prices quoted to you are those prevailing in the interbank foreign currency market. When you request a price, you simply call MF Global and you will be quoted both a “bid” and “offer” price in line with the interbank market. You are gaining access to the professional currency market at the wholesale dealing spreads without the need to be a major corporation, bank or financial institution and without the need for bank credit lines.

Trade Size

With MF Global all trades are executed in standard sizes of 100,000 base currency.

Here are some examples:

• U.S. Dollar / Japanese Yen (100,000 U.S. Dollars)
• AUD / U.S. Dollar (100,000 AUD)
• Euro / Great Britain Pound (100,000 Euros)
• Euro / Japanese Yen (100,000 Euros)