Trading via brokers and dealing rooms (by phone)

Trading via brokers and dealing rooms (by phone)

Performing Forex trading via Dealing Room dealers (over the phone) requires knowledge about the way dealing rooms work, and the terminologies used in the course of trading.

At start, the client should specify whether he/she is interested in obtaining a QUOTE (in order to make a deal) or just an INDICATION. In the case of an indication, the price given does not bind the dealer, but rather provides information about market conditions.

When asking for QUOTE, the trader must specify the currency pair and the deal amount (volume). For example: “Need a quote for EUR/USD in EUR100,000”.

It is wise to withhold from the dealer the intended direction of the deal, specifying the pair only. Accordingly, the dealer then provides a quote comprising two prices, buy and sell (“both sides quote”). The quote binds the dealer for the very second it is given. If the trader does not immediately ask for execution, then the price is no longer in force. The dealer would then tell the customer “risk”, or “change”, meaning – the price quoted is no longer in force. In such case, the trader should ask for a new price.

On the other hand, in order to make a deal, the trader must proclaim “buy” or “sell”, together with the currency (or the price).

An example:

• The trader asks for a quote for EUR/USD.

• The dealer says “1.2010/15”.

• If the trader wants to buy EUR, he/she says “buy" (or "buy EURO”, or “15”.

• If the trader wants to sell EUR, he/she says “sell" (or "sell EURO”, or “10”.

The moment the trader says “buy” (or “sell”) he/she is bound to the deal, regardless of the market situation.