Trading Questions

1. What is spread?

In the foreign exchange transaction, the bilateral quotation will be shown, including ask and bid. Ask refers to the price of buying the basic currency (and meanwhile selling the non-basic currency). Bid refers to the price of selling the basic currency (and meanwhile buying the non-basic currency). The gap between ask and bid is spread. The traders will earn profits by the spread of ask and bid.

2. Can I trade by phone when I have problems about trading?

Origin ECN provides for 5*24 hours transaction service. If there have any problems during the trading process, you can call the official customer service hotline for trading, but our telephone trading only takes charge of modifying and closing the position, rather than accepting the command of opening the new position.

3. What is slippage?

“Slippage” refers to a trading phenomenon of the difference between the transaction price and preset price of the real order for the trading or pending order trading. It occurs at the moment that the market price has larger changes while the turnover falls behind the price changes. For example, the market gap may be reopening at the end of weekends or after the important news (such as employment data or rate decision). All markets will have the slippage occasionally, which is the universal consensus. Under the fair mechanism of ECN matchmaking trading, when the investor presets a stop profit order, stop loss order or pending order, for example, when the market price is up to the trigger price set by the investor, the stop profit order, stop loss order or pending order will become the market order, and will be transacted at the executable optimal market price at the moment. Thus, slippage may result in larger earnings or larger losses. The returns and risks have the equal probability.

In addition, we suggest clients avoid or reduce the risk exposure of holding the positions before weekends or market closing or while release of any political events and important news, and understands that the gap of such type may occur frequently.

How to evade the possible adverse impacts arising out of slippage?
a. Firstly, the slippage cannot be evaded indeed, and the range of slippage is unpredictable. In the real market quotations, we cannot predict the next price, so we fail to provide the range of slippage;

b. The following strategies provided by Origin are conducive to reducing the losses of client’s transaction:

Reduce the pending order operation similar to limited price entering in the case of slippage to the greatest extent;

Avoid carrying out the bulk-holding trading and please keep the sufficient margin to resist the unpredictable gap;

Origin ECN suggests clients read the above instructions of risks carefully, and accept and know very well before opening the account for trading. If you do not accept the above instructions of risks, please cancel opening the account or withdraw the capitals.

4. What is price gap?

“Gap” refers to largely skipping to the second quotation from the first quotation in the case of the market changes. The quotations executed by the order (stop loss, limited price or new order) executes the quotations are inconsistent with the presetting quotations, i.e. gap event. The gap we often see in the case of the extraordinary gap between the previous price and the next price will be described by “Gap” in English.

Common_problem20161024-06

This event may be caused by many reasons. Generally, the opening price while opening quotation is significantly different from the closing price in the previous trading day, or the abnormal fluctuations or liquidity shortage of relevant fundamental market during the trading process results in the sudden drastic fluctuation of the price, or the relevant fundamental market gaps in a price and transacts in the other significantly different price due to economy, politics, environment or enterprise news.

In addition, we suggest clients avoid or reduce the risk exposure of holding the positions before weekends or market closing or while release of any political events and important news, and understands that the gap of such type may occur frequently.

The following are several price fluctuation situations of pending order, stop profit and stop loss. These four situations occur in the case of the asymmetric liquidation of buying and selling in the price changes.

Example 1: Limit order of close position (take profit)

Holding long – execute “sell limit” close position, i.e. “take profit”.

Pending order:The client buys 1 lot of spot gold XAUSUD (holding long) at the market price. The opening price is 1375.16,meanwhile, the client establishes a limit order of close position (i.e. take profit) by1376.90 immediately.

Execution:After establishing the order, the [bid] does not rise to1376.90, all the time, Then the market has larger fluctuations suddenly, and the market quotation [gap] occurs. The bid suddenly skips to (1376.90), through the order price 1377.34,and triggers the system to execute the transaction at the first market price of 1377.34 after gap. Compared with the presetting stop profit price of 1376.90 it earns more profits of USD44

Type of position order lots Commodity Price Sell Limit Setting (Sell) Transaction price
Buy 1 XAUUSD 1375.16 1376.90 1377.34

Example 2: Stop loss order of close position (stop loss)

Holding short – execute “buy stop” close position, i.e. “stop loss”

Pending order: The client buys 1 lot of spot gold XAUSUD (holding short) at the market price. The opening price is 1430.23, meanwhile, the client establishes a stop loss order of close position (i.e. stop loss) by1432.83 immediately.
Execution: After establishing the order, the [ask] does not rise to 1432.83,all the time. Then the market has larger fluctuations suddenly, and the market quotation [gap] occurs. The ask suddenly skips to(1432.83),through the order price1433.02,nd triggers the system to execute the transaction at the first market price of1433.02 after gap. Compared with the presetting stop loss price of 1432.83 it has more losses of USD 19

Type of position order lots Commodity Price Sell Limit Setting (Sell) Transaction price
Buy 1 XAUUSD 1430.23 1432.83 1433.02

Example 3: Limit order of open position (buy limit)

Without holding a position, it enters by pending order.

Pending order: The client establishes a buy limit order (open position), and buys 1 lot of EUR and USD currency pair, with the pending price is1.3180

Execution:After establishing the order, the [ask] does not fall to 1.3180 all the time. Then the market has larger fluctuations suddenly, and the market quotation [gap] occurs. The ask suddenly falls to(1.3180),through the order price 1.3173,and triggers the system to execute the transaction at the first market price of 1.3173 after gap. Compared with the presetting opening price of 1.3180 it earns more profits of USD70

Type of pending order of open position lots Commodity Presetting price Transaction price
Buy Limit 1 EURUSD 1.3180 1.3173

Example 4: Stop loss order of open position (sell stop)

Without holding a position, it enters by pending order.

Pending order: The client establishes a sell stop order (open position), and buys 1 lot of GBP and USD currency pair, with the pending price is 1.6420.

Execution: After establishing the order, the [bid] does not fall to 1.6420 all the time. Then the market has larger fluctuations suddenly, and the market quotation [gap] occurs. The bid suddenly falls to 1.6418 through the order price (1.6420), and triggers the system to execute the transaction at the first market price of 1.6418 after gap. Compared with the presetting opening price of 1.6420, it has more losses of USD 20.

Type of pending order of open position lots Commodity Price Transaction price
Sell Stop 1 GBPUSD 1.6420 1.6418

Any order (including stop profit, stop loss, and pending order) may not be executed at the presetting price due to the fluctuating market or the influence of gap. In such case, the order will be executed at the following most competitive price of the market, and the degree of slippage depends on the liquidity of buyers and sellers in the market. Under the mode of ECN anonymous matchmaking transaction, each client order will be matched fairly and anonymously. Each client may gain larger profits or losses, and the benefits and risks are equal bilaterally.

Time window of general gap:
a. Publish of non-agricultural and other important risk financial events;
b. Unexpected financial data publish;
c. Publish of information of currency and financial policy changes;
d. Intervention of speech of important financial officers;
e. Huge trading volume due to great market demands on some product or some currency.

Influence of price gap:

1.Regardless of stop profit, stop loss, market order, or other entering pending order, the transaction will be influenced in the case of quotation gap. The platform will deal the order for the clients at the price after gap. This price is the true price in the market, so the price distance between this true price and the price before gap cannot be predicted.
2.The gap will result in the slippage transaction of orders.
3.The slippage transaction arising out of gap may result in the negative value of the client net value after liquidation.

Special declaration: This phenomenon is the general phenomenon of market trading, so Origin strongly suggests clients to read the risk instructions carefully and understand the real market conditions before choose trading. Otherwise, Origin ECN will not bear any responsibility and even will not pay any compensation for the slippage transaction or liquidation due to price regulation of the objective market in the particular cases.

5. What is spread expansion? Why is the spread expansion generated?

As ECN platform provider, Origin provides the floating spread trading for clients, and the clients can view the basic status of spread floating in the column of trading products on the official website. However, in some particular case, the trading products may have higher spread than the average value, called as spread expansion.

The spread expansion is generally generated in the time node of publish of special news event. At this time, the products involving FOREX and precious metal will have the spread expansion during the quotation has the price gap, while CFDs will also have the spread expansion beyond the normal trading hours of futures.

While understanding the spread expansion indeed, we should firstly understand the ECN cost principles.

The trading process of client orders on ECN trading platform is as follows:

Client ordering (buy or sell) --> Order through the trader platform --> Order is accepted by some bank executing in interbank market (ECN trading network) (sell or buy)

It is noted that buying and selling are two processes during this process, and both are not made at the same time, so the execution of these two operations may be accepted by different banks, as shown in the following Fig.

Common_problem20161024-07

Thus, the forming process of offer is:

Various banks in the interbank market independently offer the buying price and selling price of a currency pair at this moment, while traders screen out the most competitive buying price and selling price to the clients from these offers, and clients receive the most competitive price and gain the maximum profits of trading.

For example, at some time point, in view of EUR/ USD
CityBank offer: buying price: 1.32035 selling price: 1.32010
HSBC offer: buying price: 1.32033 selling price: 1.32011
NAB offer: buying price: 1.32036 selling price: 1.32013

…………….
…………….

The offers will instantly be aggregated to the interbank offer market and then conducted to ECN trading network.

Moreover, in the above offer sources of more than 50 world class banks, Origin platform providers will screen out the most competitive price to the clients. From the above cases, the lowest ask price is 1.32033 (provided by HSBC), while the highest bid price is 1.32013 (NAB). At this time, the client sees the offer of 1.32033/1.32013.

When the liquidity bank offer source is sufficient, the client can gain better trading cost.

Why is the spread expanded?

Many banks and trading institutions stop the offer and trading for the purpose of risk management in the case of opening or risk events, so that the flow of the liquidity offer source is smaller, and accordingly the spread of Origin is expanded on the premise of offer from a very small number of banks.

The time of spread expansion generally focuses on:
a. Within 5 minutes while suspending at weekends and opening on Monday.
b. Occurrence of important data or major news.

Possible influence of spread expansion on trading:
a. Liquidation of hedge account. (For lack of the available margin of clients, the spread expansion will result in the reduction of net value and excessively low proportion of margin. When the net value is reduced to 100% of the margin, the system will carry out the forced liquidation for the client position. During this process, the decrease in funds after liquidation of clients will be caused along with the slippage.)
b. Asymmetric transaction of stop profit and stop loss points in view of the hedge. (Due to the large spreads of the ask price and bid price, the transaction price of ask and bid will have great difference.)

Thus, Origin reminds clients with frequent hedge trading of reserving the sufficient margin trading during the process of trading, in case that the net value is lower than 100% of the margin and accordingly results in liquidation.

This phenomenon is the general phenomenon of market trading, so Origin strongly recommends the clients to carefully read the risk instructions, understand the real market conditions and then choose trading. Otherwise, Origin Markets will not bear any responsibility and even will not pay any compensation for the slippage transaction or liquidation due to spread expansion of the objective market in the particular cases.

6. Can Origin platform trade during the closing period of the market?

During the closing period of the market, the offers of the global bank terminals stop, so Origin platform does not allow the clients for opening trading.

7. Does Origin platform hedge use the margin?

All product hedges on Origin platform without using the margin.

8. Why is the swap rate charged for three times on Wednesday?

According to the international banking practices, foreign exchange transaction is settled after 2 trading days. The swap rate is calculated as per the settlement date. Wednesday: swap rate of 3 days. If holding positions from Wednesday to Thursday, the settlement date is Friday to the next Monday, so the rate for 3 days should be paid/charged.

9. Is it limited to the size of orders held at the same time?

For holding the position of trading, Origin will adjust the leverage in accordance with the number of the client trading lots, and recommend the clients to adjust the positions.

10. How long can I hold my order?

In principle, you can hold your order all the time as long as the margin is sufficient.

11. How do CFDs of Origin ECN platform calculate the price?

CFD price of Origin is the adjusted price calculation based on the object products and fair value. The fair value is to subtract the compound interest and dividend from the spot price.

12. Why does MT4 platform display “Trading is Not Available”?

“Trading is Not Available” is a common error of MT4, mainly because MT4 fails to handle multiple processes at the same time. Thus, you are required to restart your MT4 to solve this problem.

13. Why does my platform display “Invalid Account”?

In the case of prompt of “Invalid Account”, it is generally caused by the mismatching of your user name and password or wrong server address, so you are required to reconfirm the above information.

14. Why can’t I log in the platform?

Firstly, while accessing the foreign server in China, even the perfect device will also have the connection problems for a few seconds, so the poor connection of international network recently is a normal phenomenon. If influencing the trading, it is recommended that you shoot and obtain evidence at first time, for the convenience of complaint handling by the customer service at the later stage.

In such case, as the international financial enterprise with technology leadership, Origin ECN launches the data center service, but frequent switching network will surely influence the client trading, and therefore, Origin ECN launches the proxy server and VPS virtual server technologically for support, and optimizes the client network trading environment. If your network is normal at ordinary times and only the platform login fails to connect after inspection, you can obtain the stable trading environment by switching Hong Kong server, or it is recommended to try to restart the software or restart the computer in this case for the first time.

If failing to solve the above problems, it is recommended that you save the relevant settings, install the platform software again, and then switch the server for using. For any other problems, you can call our official customer service hotline for consultation and solution.

15. What price does the platform display?

The platform filters the most competitive price to the clients by multiple liquidity bank offers, and the quotation displays the selling price.

16. How should I change my trading password?

After opening MT4 trading software, you can log in your account, then click Tool – Option – Server – Change, input the old password and new password, confirm the new password, and click OK. The new password will be effectively immediately. You can also change your Read-Only password in this way.

17. Why can’t I see all products?

If you cannot see the currency pair, you should only click right and choose “Display All” in the offer window.

18. How should I view the information of trading products involving swap rate and margin by the platform?

The rate can be seen directly on MT4 platform. After clicking right key in the offer window and choosing “Specification”, the contract specification of this type will be popped, and you can see the rate of ask and bid.

19. How to produce the trading statement?

You can produce the statement on MT4 terminal. In the window of View History, click the right key, and choose Save Report.

Risk Disclaimer:Forex margin trading carries a high level of risk to your capital, may not be appropriate for all investors. Investors shall carefully consider your financial condition and affordability before trading any financial product. Trading could lead to profits as well as loss of your investment capital, you may lose all your initial invested capital. Please ensure you've read all the risk warning before trading.

X