What are currency futures?
- A currency future is a futures contract to exchange one currency for another at a specified date in the future at a price that is fixed on the purchase date.
- Since investors can close out at any time prior to the contracts delivery date, most contracts are closed out before the contract conclusion.
- This means that currency futures are cash settled in rand and no physical delivery of the underlying currency will take place.
A futures contract is listed on the JSE Limited. Performance by the counterparties is guaranteed via Safcom (the JSE Limiteds clearing house) for all futures contracts that are traded.
Why trade currency futures?
The currency market is the largest and most liquid market in the world. Futures trading is an alternate form of investment suitable for experienced traders seeking greater diversification with their current portfolio. Futures offer the advantage of leveraged investment, where investors could profit in both a rising and falling market; in other words, they are a cost effective way to gear on exchange rates. Long or short trades, i.e. buying or selling a currency, can be executed with ease.
Currency futures also allow individuals to trade outside their two million Rand foreign investment allowance stipulated by the South African Reserve Bank. There are no limits on the value that individuals may transact in the currency futures market.
The old adage high risk for high return is especially appropriate to currency futures trading, since it is more advanced than normal currency trading. It should only be attempted by individuals who are already familiar with the currency market and are comfortable with the concept of gearing.
The futures market is extremely liquid, risky and complex by nature. However, it can be understood if broken down into its component parts and analysing how each functions. Attending a course on the futures market will help you to develop your knowledge and better understand the associated risks of trading this exciting product. We offer an intermediate level half-day derivatives course.
Existing clients can log into the platform to check course topics and details, upcoming dates in your city, and to make a booking.
New clients please phone our call centre for further information.
New clients: Click here to register now with Standard Online Share Trading.
Existing account holders: To trade currency futures, please:
2. Click on the other products menu
3. Select currency futures registration.
Download our brochure which explains in detail how Currency futures work and how to get started.