Types of operations

The concept of type conversion operation on the Forex is closely intertwined with the terminology of financial instruments. In financial markets, which in addition to the Forex market also includes gold, money market and securities, financial instruments are understood by means of financial transactions. Next will be considered only financial instruments relating to international currency market Forex. Other financial markets and financial instruments beyond the subject matter of the information portal Forex arena and will not be considered further. Types of foreign exchange transactions (financial instruments relating to the Forex) is shown in Fig.

Conversion operation

- a transaction participants forex exchange specified amount of currency of one country's currency for another country at a certain date at a set quote. Conversion operations on different forex value date, ie delivery date of the currency relative to the date of purchase / sale of foreign currency. On this basis conversion transactions can be divided into two categories as shown below:

• Operation type spot (spot) or the current exchange operations;
• Forward (forward) conversion operations.

The largest volume of transactions on the Forex spot occupied by the operation type (spot). It was working at Forex for the transaction is considered an information portal on Forex arena. In international practice, it is assumed that the value date of transactions such as spot (spot) is the 2nd business day after the deal. Such conditions are quite convenient for counterparties (members) of the transaction, as during the current and next business day, you can handle all the necessary documentation and arrange payment documents. Market, where currency is exchanged on the current (spot) is called spot market quotations (spot market).

It should be mentioned that this principle of mutual transactions such as spot (spot) is valid only for big players in the international currency market. For private investors (retail customer brokerage houses), working on Forex via the Internet, the transaction is made instantly by pressing a mouse button. In such transactions the value date as such loses its meaning - the customer's account always reflects the current status of his work at Forex.

To forward (forward) conversion operations are forwards (forwards), futures (futures), options (options) and swaps (swaps). They are also called financial derivatives (derivatives). These financial instruments have been specifically designed for real business, as they allow to reduce the risks of changes in quotations on the international currency market in the future. For a private investor who wants to earn on Forex via the Internet, such financial instruments are of little value. However, they will be considered to understand the overall picture of exchange transactions.


Forwards (forwards) or as they are called - forward contracts are concluded between parties in the transaction subject to exchange a certain amount of currency at a pre-specified quotes predetermined date (value date). The deal will be made regardless of what the current (spot) prices will be in the Forex market on the value date. The amount of the transaction, quotations and date valyutirovaiya can be any - it all depends on the agreement they come to contractors.

Forward contracts on the Forex can be useful, for example, when the Russian company plans to purchase equipment for the U.S. dollars abroad. Imagine that a company currently does not have enough money to perform operations, but expects to cash in rubles to the account during the month. It also expects the exchange rate changes in an unfavorable direction for themselves, ie expected to rise in the dollar. In this case, it makes sense to conclude a forward contract with the bank to purchase the required number of U.S. dollars with a maturity date of one month for the company at competitive rates. Naturally, the bank can not go to such conditions, if also expected rise in U.S. dollar, and the search for a counterparty to the transaction can be a challenge.

Forward contracts on the one hand to minimize risks, and on the other hand can be a source of lost profits. So, if in the previous example, one month U.S. dollar is not more expensive, but cheaper, then the company will be a loss of income. After all, the company could pay for the equipment less rubles.

Futures (futures), in contrast to forward contracts have standard terms of payment (value date) and fixed amounts of currency. This feature allows them to be sold as conventional securities. For futures trading on Forex there is a separate market - the futures market (futures market). Average duration of treatment at a futures market - about 3 months.

Options (options) are similar to futures, but weaken the commitment of one of the parties to the transaction. So, if you buy futures you must make a deal on the agreed terms of the deal, in case of an option, you can opt out of the deal at your discretion. Forex Options are traded on a single market - the options market (options market).

Swaps (swaps) - type conversion operation in which the parties bargain buy / sell a certain amount of currency with the obligation to perform a reverse transaction after a certain period of time. For example, the company buys 1 000 U.S. dollars for rubles at the current (spot), quoting from a bank with a commitment to sell the bank to 1000 U.S. dollars for rubles a month for the same current (spot) quotations, which will be on FX next month. Swaps - non-standardized contracts, so the particular market they are traded.

From all the above conversion operations (financial instruments) to a private investor who wants to earn on Forex via the Internet, are the most important operations such as spot (spot) on the spot market (spot market). That is the spot Forex market is considered in detail in subsequent chapters.