FAQs

Margin FX & CFD trading

a) General questions:

1. Is margin FX and CFD trading suitable for me?
Margin trading involves significant financial risk: which can also make trading exciting and rewarding. But the inherent leverage can result in losses that exceed your initial deposit, so trading is not suitable for everyone. Please ensure that you fully understand the risks involved by reading our Risk Disclosure Statement

You should consider the following factors before deciding to start trading:

• Only trade with money you can afford to lose. The margin represents a small part of the positions you can trade, so you can lose more than the balance in your account. Set yourself a limit in terms of total exposure and make sure that this is disposable income.
• Never trade with credit. We allow you to deposit funds using your credit card for convenience and speed, but margin trading is already significantly leveraged, and trading with borrowed money increases your leverage.
• Understand how to limit your risks with stops and always place stops on all your positions when you open them.
• Understand the psychological impact of trading; the excitement can have an impact on your judgement. Successful traders tend to be very systematic and unemotional in their trading: emotions can distort good intentions.
• It takes time to learn how to trade successfully. Don’t get fooled by get-rich-quick schemes on the internet.
• Invest in your trading tools. At the least, you should invest in a good high-spec computer with a large screen or even multiple screens, and the best internet connection. This makes it much easier to simultaneously see all your charts, run complex indicators and run companion software.

FX trading can be a great hobby or full-time occupation for those who enjoy some risk and have net available assets.

2. What are the fees and costs of trading Margin FX & CFDs?
There are two costs: the spread between the buy and sell price which are included in the price when you buy or sell a position, and the cost of carry (the cost of borrowing money from us to trade). For the cost of carry, each night we will roll your positions to the next trading day and deduct or credit the swap points plus a small Velocity Trade haircut for the currencies you hold. These will be shown on your account statement each night. See our product schedule for overnight financing.

b) Opening an account

1. What should I do before I decide to apply for a trading account?
Make sure you have read and understood our Risk Disclosure Statement and Terms and Conditions outlined in the Client Agreement.

2. What do I do if I want to try trading but don’t want to commit any real money?
We offer demo accounts that gives you access to our platform and R100,000 virtual money to trade with on the actual market, so you can practice trading without committing your own money. This account is acquired by signing up for a demo account to which we will then provide you with a username and password that allows you to trade on this demo account for 14 days. Once you are comfortable with the platform and want to trade with real money, you simply apply for a live account.

3. How do I open a live account?

Three easy steps:

1. Complete the online application form for Terminal Velocity.We'll email you to let you know you've been accepted as a Velocity Trade client.
2. Deposit money into your Velocity Trade Client Account.
3. As soon as your deposit is cleared, we'll email you and provide you with your account password.

4. Why can't I complete the application for a joint, trust or company account online?
The requirements can be complicated therefore applications of this nature are handled manually. Please enquire with our Client Services Team.

5. What is the cost to open a trading account?
There are no costs related to opening or maintaining a trading account with us.

6. What information and documents will I need to open an account?
You will need two forms of I.D.

• ID (Green bar-coded ID or foreign passport)
• Proof of residential address (e.g. Bank statement or utilities bill)

7. How long will it take for my account to be opened once I submit my forms?
Within 24 hours from receipt of ID and initial deposit, subject to bank clearing.

8. Why do you need my personal information?
We are required to verify your identity before opening an account in your name. Under the Financial Intelligence Centre Act (2001) we are obliged to positively identify you before opening a facility or undertaking a transaction. We also use this information for your security - to ensure we only provide your account information to you.

9. Why do you need my bank account details?
Once you've opened a Velocity Trade Client Account, you can make withdrawals by submitting an online withdrawal request. This will be done via electronic transfer to the bank account you nominate now. You will be able to change your destination account (for example, if you decide to close the account you nominate now) by completing the notification of account change form, this normally takes between 1-3 business days.

10. Why do you need my phone number?
To give you great service. If you phone Velocity Trade from one of the numbers you provide, our system will automatically bring up your file, so we will be ready to help you. 

11. Why do you need my employment details?
To satisfy our prudential standards and our Know-Your-Client policy.

12. Why do you need my email address?
Email is the primary way we communicate with you. We use your email address to inform you of when your account has been opened, to provide you with your login information and to send you your trading software.

Under the Unsolicited Electronic Messages Act 2007 we are obliged to inform you that by giving Velocity Trade your email address you are giving us permission to contact you in relation to other products and marketing material from Velocity Trade. If you do not want to receive this information, click unsubscribe at the bottom of the email.

13. If I don't allow you to send me marketing information, can I still open an account?
Yes, but you may miss out on information that would benefit you as a trader. We have no intention of bombarding you with irrelevant information, but under South African law we need your permission to send you any additional information.

c) Depositing & Withdrawing Funds

1. How do I deposit funds?
Once you have opened a trading account, we will email you all the details for our client bank account. You can then simply do an EFT, or deposit money at a bank branch using the bank account details below:


Account Name    :   Velocity Trade Financial Services Pty Ltd
Bank                  :   Nedbank
Branch Code       :   123209

Please always quote your Velocity Trade account number on payment reference. For added security and efficiency please also advise us of your deposit by email at trading@za.velocitytrade.com.

Remember you can only trade with cleared funds that have been deposited to your account. Depending on your bank some payments may take longer to process than others and you should take this into account when making your payment. In particular if you are depositing funds to meet a margin call, your positions may still be closed if funds have not been cleared or have not been deposited to your trading account. If you are in doubt please contact us before making a payment.

Click here to see how to deposit and withdraw margin funds 

2. How long will it take for funds to show up in my account so I can start trading?
Depending on your bank some payments may take longer to process than others and you should take this into account when making your payment:

• EFT's from other SA banks are transferred overnight and should show up in your trading account the next morning
• EFT's from the same SA bank should show up immediately
• Deposits made at a bank branch should show up immediately.

We advise that clients be prudent and that they take into consideration the time taken in clearing EFTs.

3. How do I withdraw funds?
You can make withdrawals direct from our website by submitting an online withdrawal form. By default, the funds will be transferred electronically to the bank account you have nominated. You can change your destination account and nominate a new bank account by completing this form. 

4. How much can I withdraw at any one time?
There is no maximum withdrawal amount and you can withdraw any funds not required for margining. Note that if you withdraw money from your account and leave insufficient margin, then your positions could automatically be closed out.

d) How Velocity Trade handles your money

1. How does Velocity Trade handle my money?
We adhere to stringent audited process for handling your money, to ensure security and accessibility. Client funds are held in a segregated trust account with major local and international banks.

2. Where is my money held?
Your money is held in a client trust account with a major registered bank in the relevant countries we operate in. When you make a deposit, your money goes into the segregated funds account at a top-tier registered bank.

3. How does the segregated fund account work?
When you open a trading position, a margin for this transaction is deducted from the segregated funds account and posted with our liquidity provider for the duration of the trade. Profits or losses are credited to or debited from your Velocity Trade Client Account according to daily mark-to-market valuation of your position. Upon close-out of your position, any profit or loss is credited or debited from your Velocity Trade Client Account and the margin that was used for this trade is returned to your Velocity Trade Client Account.

4. How does Velocity Trade hedge its positions?
Velocity Trade hedges every position directly in the market immediately when you do a trade. We never trade against clients and never run our own positions. This means we have no market exposure and there is no counterpart risk for you. This is the safest model for clients.

5. How does Velocity Trade manage its liquidity?
As we are regulated in South Africa, we diligently apply the capital requirements. In addition, unlike many other brokers, we use external auditors to specifically monitor our compliance with capital requirements and report those to management and the South African regulators. We make sure we have plenty of our own capital as surplus liquid funds at all times and have strict internal and external controls in place to make sure that these are monitored. Being part of the Velocity Trade International group means we have the backing of an international parent that is regulated by a number of global regulators, including the UK Financial Services Authority (FSA). Unlike some brokers, we do not allow clients to run credit accounts, which helps protect other clients from one client's default. These measures mean your counterparty risk is much lower than with many other brokers or providers.

e) Your Client Account 

1. Do I earn interest on the balance in my Client Account?
Yes. For the criteria to receive interest and the rate at which interest is paid, see our rates schedule. 

2. Do you pay interest on account balances?
Yes. For the criteria to receive interest and the rate at which interest is paid, see our rates schedule.

3. What about tax?
We cannot provide any tax advice. Tax implications are dependent on your personal circumstances and country of residence, and you should consult your accountant or tax advisor.

However, as a general guideline, profits from trading can be considered income and should be reported as such on your tax return. Some people trade using a company or a trust rather than as an individual which means any profits are charged at the company or trust tax rate, and any losses may be offset against your income in certain circumstances. In some situations, trading profits may be considered as capital gains instead of income, and taxed accordingly. You should consult your accountant or tax advisor to understand how this applies in your circumstances.

Annual household income is the total amount of financial gain derived by all members of your household - from any source, including salary, investments, annuities and royalties.

5. What is net worth?
Net worth is the difference between the total value of all your assets and the total value of any debts that you owe. 

f) Trading Margin FX: trading terms & concepts defined

1. What happens when I am in margin call?
The trading platform will show the margin required for the positions you have open. When the amount of money in your trading account falls below the minimum margin level required for your positions, you are in margin call. This is shown on the platform and the platform will also send you a margin call email. However as markets move very fast this can happen very quickly and you may be at liquidation level before you have time to see the margin call email.

It is always your responsibility to make sure that you have enough margin in your account to cover your positions. If your account reaches zero - liquidation level - we may close some or all of your positions without further notice. If this happens, it will be at the current market price, which could mean significant losses for you. If you are in margin call you should immediately deposit more funds into your account or close some of your positions. Note that depositing funds can take time, and we can only accept cleared funds. If you are in margin call and you intend to deposit funds to your account, we advise that you call us to discuss how best to deposit funds. In many cases the only way to deposit funds very quickly is by using your credit card, as these are processed and cleared instantly. However you should try to manage your account so that you have enough surplus funds to avoid getting into margin call.

2. What does DMA mean?
DMA: Direct Market Access is a model where every trade made by a client is immediately passed into the underlying market. This is in contrast to a Market Maker model, where the provider or broker runs his own positions and may end up trading against you. DMA uses anonymous trading with no re-quotes, making it conflict-free and the most robust trading structure. Click here to learn more about DMA.

3. What is a market maker? 
Market makers have dealing desks that act as middlemen to a trade. They set prices that they show to customers that are not actual prices of the interbank market or real pricing of FX markets. They run their own trading book and may hold your order and trade against you by going short when you go long and vice versa, since they make profit when you make a loss. Click here to learn more about market makers.

4. What if my provider says they have no dealers?
A true DMA model will mean that there are no exceptions as to which trades are hedged. Make sure your provider runs a true DMA model and read the small print to ensure that your account is not excluded from their DMA service. 

5. What is stop hunting? 
Stop hunting is when dealers monitor your trades and in order to pull you out of a trade when the respective currency reaches your stop price, preventing you from profiting if the price rises again. The price they show you may in fact be different from that of the underlying market. 

If you have traded with a Market Maker then you may have experienced a stop being hit as soon as the price touches it, and wondered why a limit that is locking in profit seemed not to get hit even when the prices reached it. If a trade has moved in your favor and you try to get out of a winning position, they will often re-quote you.

6. What does it mean if an order expiry is set to be 'good till cancelled'?
The order remains active on the system until it is filled or cancelled by you.

7. How would you set an order to expire at a particular time?
By defining an order expiry time on the order entry screen.

8. What is a TP order?
A Take Profit order is an order placed to close your trade once it reaches a certain level of profit. When your take profit order is hit on a trade, the trade is closed at the current market value. Take profit orders are also sometimes referred to as limit orders.

9. What is an SL order?
A Stop Loss Order is an order placed to close your trade to prevent it from falling below a certain price level.

10. What does OCO mean?
A One Cancels the Other order is placed stipulating that if one part of an order is executed, the other is automatically cancelled. 

11. What causes rates to go indicative (grey)?
Your free margin ratio has fallen below the warn %.
This could be caused by:

• a) increased MTM unrealised losses (due to adverse exchange rate movements against your own position),
• b) position closeouts causing increase in realised losses and therefore a reduction in the cash collateral,
• c) withdrawing cash from collateral balance,
• d) rates from rates source being marked as indicative.

g) Technical Support

1. I've forgotten my password or my password doesn't work.
Simply call us and we will verify your identity by asking you the security question you selected in the account opening process and issue you a new password.

South Africa: +27 (0)21 200 8827
Email: support@za.velocitytrade.com

2. I have not received my Velocity Trade client number and user name confirmation e-mail.
Your spam filters may have blocked our email. To avoid this, add ' support@za.velocitytrade.com ' to your address book. This will allow emails from us to get through. . If you suspect this has happened, request a resend by us by contacting us on +27 (0)21 200 8827 or by email to support@za.velocitytrade.com.

3. I can't connect to the trading platform.
Are you trying to connect from home?

• Check that your internet connection is running by starting a search in your web browser.
• If you have anti-virus software (Norton, Kaspersky, AVG, MacAfee, etc.) installed or you are behind a firewall you could be denied access to the software. Please configure your firewall or antivirus to allow outside connections .
• If you are connecting via a proxy server ask your ISP (Internet Service Provider) for help in configuring the proxy.
• Ensure no P2P or other bandwidth intensive software is open as these can cause unexpected disconnections.

Are you trying to connect from the office?

• Your office may be blocking connections on the ports required by the trading platform so you may need your network administrator to open ports and give you access.
• Your company may be running a proxy server, ask your IT support team to help you configure the proxy.
• If none of the above work, try connecting from home first.
• Are you trying to connect via mobile application (laptop)?
• Check the speed and reliability of your internet connection. The trading platform needs a good connection as it streams live prices. You can use 3G wireless internet connections, such as Vodems, but reception can be poor in some areas which may affect the trading platform. Speak to your ISP about this.

4. My connection with the server has been lost.

• Please close the window and log in again.
• Please note that you cannot log in more than once at the same time with one login as a security measure. The original screen you had opened may not have been totally disconnected and the server may still think you are logged on. The simplest way to solve this is to restart your computer.

h) General questions about foreign exchange

1. What is a Foreign Exchange contract?
A foreign exchange contract (also referred to as FX or Forex) means a contract to buy or sell currency or to exchange one currency for another by simultaneously buying one currency and selling another. The foreign exchange market, where foreign exchange contracts are traded, is the largest financial market in the world, and is central to cross-border transactions and country-to-country business.

2. Who are the participants in the FX market?
The FX market has historically been dominated by the banks, including central banks, commercial banks, and investment banks. However, the number of other participants is growing rapidly, and now includes large multinational corporations, global money managers, futures and options traders, and private speculators.

3. When is the FX market open for trading?
The FX market trades 24 hours a day.FX trading begins each day in South Africa, and moves around the globe as the business day begins in each financial centre: first to Tokyo, then London, then New York. Unlike other financial markets, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

4. What factors determine currency prices?
Currency prices, also known as exchange rates, are affected by a wide variety of economic and political conditions. The most important factors are interest rates, inflation and political stability. Any of these factors, as well as large market orders, can cause high volatility in currency prices. However, the size and volume of the FX market makes it impossible for any one entity to affect the market significantly for any length of time.

5. How often do currency prices change?
In the foreign exchange market, exchange rates change continually. Traditionally, however, money transfer companies - banks included - set their exchange rate only once a day, adding a large margin on what they pay to cover any price movements that occur during the rest of the day. By contrast, Velocity Trade's exchange rates are live, fluctuating on a real-time basis throughout the day, reflecting the underlying market activity. So, to make a transaction profitable to us (and cover our costs) we only need to apply a small margin to the rate in the underlying market at the minute you transact. You reap the benefits.

6. How are forward rates calculated?
The forward exchange rate is calculated by using the current exchange rate and interest rates for the two currencies and the time or length of the contract. The forward exchange rate is a function of the current exchange rate and interest rates of the two currencies involved and is not a forecast of the future direction of the exchange rate.