Takaful Frequently Asked Question

Unit Trust Frequently Asked question

FOREX Frequently Asked Question

1.  What is currency trading?        Simply stated, each country has its own currency.  Currency trading occurs when one country's currency is traded for another country's currency at the prevailing exchange rate.

2.  How is currency traded?      All currency trading is traded in LOTS. Each lot has a different amount of currency. For example; a Swiss Franc lot has 125,000 Swiss Francs in it. A trader does not buy lots in order to buy and sell it or trade it. A trader opens a margin account, enabling him the right to trade it.

3.  What is a margin account?      A margin account is a bond account. It is like a savings account. Before you can trade, you need to place a certain amount of money in what is called a margin account. You are guaranteeing other traders that you can pay them if you lose. That account is overseen by your broker. He monitors your account when you trade. He usually will not allow you to risk more than what is in your margin account. The margin account exists so, as you win on a daily basis, they have a place to deposit your money. Conversely, when you lose, they have an account to withdraw the money.

4.  How is money made trading currencies?      Currencies are traded on a point or pip system. A pip is another word for a point in the currency trading arena. Traders are trying to capture points. Depending on the currency, each point is worth a different amount. For example; the British Pound is worth about $10 per point that is traded per lot. If you trade 1 lot and capture 40 points, you just made $400. If you trade 10 lots and capture 40 points, you just made $4,000.00, etc.

5.  What is the difference between Futures and FOREX?       Currencies are the money that represent the monetary system from different countries. For example; the Japanese Yen, Canadian dollar, Brazilian Real, Swiss Franc, etc. Futures trading of currencies is done in trading pits, where you are trading those currencies today, but for future prices. FOREX trading is trading actual currencies at today's exchange rate with banks. All trades are done through brokers or market makers.

6.  Am I buying actual currencies when I trade?      No. With your margin account, you are buying the right to trade one "lot" of a currency. Each lot equals a different amount of currency, depending on the currency being traded verses the US dollar.

7.  What is Day Trading?      Day Trading is when a trader buys and sells his lots or stocks that same day. He is in and out of the market that same day. He does not hold his position overnight or for a week, etc.

8.  What percent of people really earn money on the FOREX?      10 % make money, and 90% lose money!      Why?      The 90% who enter the market are driven by emotions such as greed and fear. They lack a sound equity management plan and know very little about the techniques of trading. The fact is they are lacking adequate and proper education for the task at hand.

9.  Why do Professional Traders earn so much money?      Most Professional Traders are part of the 10% earning money. The 10% earning money actually receive the 90% money that is lost . If the 90% are paying the 10%, you can easily figure out that the 10% are being paid quite handsomely.

10. Can I become a successful Professional Trader?       Absolutely!  Trading is a profession that most anyone can learn. However, it doesn't happen over night or in a few weeks. You must go through the same processes of education and mentoring that all professionals go through. Generally, we are becoming conditioned by numerous national ads into believing that trading is simple. If it is that easy why do we hear the horror stories about day traders? Why do 90% of people lose on the FOREX?

11. Is trading a form of gambling?       All forms of trading and investment can be construed as a form of gambling, although neither are the same as playing the lottery, roulette or betting. Traders seek price fluctuations and investors seek return on investment. Both require a calculated risk that is minimized by knowledge. You are always gambling when you don't know what you are uneducated, trading emotionally or with a " hot tip".       Calculated risks are taken in all investments. People risk huge sums of money and not every one succeeds. Even when there is a track record of success as in many franchises there is still no guarantee. Their investment becomes a calculated risk.       The FOREX market is no different. When you trade not knowing what you are doing, or off a tip, you are gambling. When you trade after you have been educated or mentored by a successful program, or by other successful traders, you are now taking a calculated risk.

12. Can I lose everything when trading the FOREX?       No. You can't lose everything you own. The under-educated will more than likely lose their margin account. The educated will more than likely capture the loser's margin account money.

13. Why don't we hear more about the FOREX?       Reliable sources indicate that about 4 trillion dollars of currency is traded daily on the FOREX. The majority of the volume historically is generated by major investors, banks, financial institutions and governments. Thanks to the Internet, more and more people like us are beginning to learn of the opportunities and are getting involved.

14. How can I  get started?       You need to be very careful and exercise due diligence. There are growing numbers of international firms offering various approaches to FOREX trading. Look before you leap. Do your homework and check references. Many companies prey on the greedy promising phenomenal returns that are the exception, not the rule!  Find a company that doesn't promise the moon. If it sounds too good to be true, it usually is. Reputable firms have credentials.                  Beware of "Black Box" systems. It is against FTC regulations for a firm to offer any guarantee of performance of any system. What one can guarantee and offer is that their trading methodology is sound, productive and profitable.        Trading decisions should not be made by computer only. A professional trader is a human being, with emotions, intuition and a brain to interpret what the computer tells him/her. A trader is not a computer. A professional trader has been educated and is disciplined to live by his or her trading methodology of good judgment trading.

15. What Is good judgment trading?       Good judgment trading is the exact opposite of a Black Box System. It's a complete understanding of the market and its constantly changing environment. It is a clear trading methodology utilizing high probabilities. When a trader is educated, he no longer takes a shot gun approach to the market. He takes a very focused "rifle and target" approach.

16. How much money can I make?       If you get involved with the right company offering the proper education and mentoring, you can expect to create a financial performance expectation plan. Your plan will depend on how much you start out with, how knowledgeable and how unemotional you are.      Never enter the market without first paper trading, which is trading pretend money. Once you achieve a track record of consistently completing successful trades and prove to yourself you can trade, then and only then, should you enter the market with your own money.

17. What do emotions have to do with It?       Where money is involved so are emotions. Many people are quite knowledgeable about trading but can't handle the emotions.  Your emotions will be your biggest obstacle to successful trading. Not the techniques. To be a successful trader you cannot trade emotionally. You must trade logically. Our egos drive us to be successful 100% of the time, but in reality no one is successful 100% of the time. Not even the professionals. Successful professional traders clearly understand the market is about logic, not emotions. They trade logically, not emotionally and they are the 10% who trade successfully all the time!

18. Are there books I can buy to educate myself ?       Hundreds of books are available on this site and we encourage you to read. However, no one has written a "how to - step by step" book on how to become a millionaire over night or even in a month. Why? Because successful trading is a process, it does not happen overnight.            The market is vast and complex. Hundreds of authors have written books about most of the characteristics of the markets. There is a lot to know.        Success in trading comes by focusing on one or two markets and specializing in those markets. One must decide what they want to trade, educate themselves and then focus in on that area of the market.

19. What can Introducing Broker do for me?       You will begin a journey in forex world with full guidance and involvements from experience & successful professional traders, starting from depositing fund to live trading. We will teach you all the processes for becoming successful trader for FREE. We will provide you with continuous personal support, research and education. We offer advanced trading courses as you progress, also for FREE.  20. Is FOREX Trading legal in Malaysia? This is the most common questions about forex trading in Malaysia. As of this writing, there is no regulation or regulatory agency to govern online Foreign Exchange in Malaysia. Our Central Bank has a law prohibiting individual or corporation to accept or collect deposits from public. [Section 25(1) of BAFIA 1989]. Any person or company who commits an offence under Section 25(1) of BAFIA 1989 shall, on conviction, be liable to a fine not exceeding RM10 million or to imprisonment for a term not exceeding 10 years or to both. However, those who wish to invest in Foreign Exchange can deposit the fund directly into personal investment account with international broker with a small telegraphic transfer fee. 21. Is FOREX trading HALAL? Nowadays, there are many brokers offering a NO SWAP account which means no interest receive or paid if position is held overnight. no interest = no riba and therefore is considered Halal according to Fatwa.  Below is an explanation on forex in Islam. "Here two points are worth noting. First, when one assumes a fixed exchange rate regime, the distinction between currencies of different countries gets diluted. The situation becomes similar to exchanging pounds with sterlings (currencies belonging to the same country) at a fixed rate. Second, when one assumes a volatile exchange rate system, then just as one can visualize lending through the foreign currency market (mechanism suggested in the above example), one can also visualize lending through any other organized market (such as, for commodities or stocks.) If one replaces dollars for stocks in the above example, it would read as: "In a given moment in time when the market price of stock X is Rs 20, if an individual purchases 50 stocks at the rate of Rs 22 (settlement of his obligation in rupees deferred to a future date), then it is highly probable that he is , in fact, borrowing Rs. 1000 now in lieu of a promise to repay Rs. 1100 on a specified later date. (Since, he can obtain Rs 1000 now, exchanging the 50 stocks purchased on credit at current price)" In this case too as in the earlier example, returns to the seller of stocks may be negative if stock price rises to Rs 25 on the settlement date. Hence, just as returns in the stock market or commodity market are Islamically acceptable because of the price risk, so are returns in the currency market because of fluctuations in the prices of currencies. " by Dr Mohammed Obaidullah http://vlib.unitarklj1.edu.my/htm/islamforex.htm However, one would argue on the use of leverage for trading in forex as it is perceived as form of conditional contract to enter the market  which require a huge sum of money. USD100,000.00 for 1 lot of currency pair to be exact. Leverage means using something small to control something large. in Forex, leverage is not a borrowed real money to use for investment as described in general financial instrument which is Haram,because it is a contract between trader and broker to enable retail trader to open position in currency market with low capital in which the broker will combine the small lots and transact the standard lot into the currency market. (not into the exchange as retail Forex is Off Exchange). There are a lot of opinions and supporting Hadith and Quran versus on Islamic financial method and principal, you may do your own research and decide on which fatwa you would bias to. If in doubt, it is recommended NOT to participate in Forex. Otherwise, the research by Dr Mohammad above is sufficient to put us in faith of the Halal-ness of Forex profit as our income. 22. How do I open FOREX account? is the money safe? how do I transfer the money? You will open an account directly with US Broker of your choice. All US brokers are regulated by NFA and the compliance in handling money is very tight. Refer to your Introducing broker before you select any forex broker. You will then required to Telegraphic Transfer the money from your own account with similar name as per your account in forex broker. the transfer usually takes 2 business days due to time difference and there is a small fee for the transfer. (RM20). You can also use credit card or maybank2u with certain brokers who accept it. Prepare a scan copy of your IC and also any billing statement for proof of residency. the documents are required for your withdrawal upon profit. Any transfer above RM50,000 will be notified to Central Bank and you are required to furnish a proof of origin of the money to avoid Anti Money Laundering ACT (AMLA)  23. What is the minimum size of investment For Micro Account = USD1, For Mini Account = USD100, For Standard Account = USD1000.     RISK DISCLOSURE THE RISK OF LOSS IN OFF-EXCHANGE RETAIL FOREIGN CURRENCY MARKET TRADING CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE, ARE FULLY CONSIDER WHETER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD ALSO BE AWARE OF THE FOLLOWING  FOREX TRANSACTIONS ARE NOT TRADED ON AN EXCHANGE, AND THOSE FUNDS DEPOSITED WITH THE COUNTERPARTY FOR FOREX TRANSACTIONS MAY NOT RECEIVE THE SAME PROTECTIONS AS FUNDS USED TO MARGIN OR GUARANTEE EXCHANGE. TRADED FUTURES AND OPTIONS CONTRACTS. IF THE COUNTERPARTY BECOMES INSOLVENT AND YOU HAVE A CLAIM FOR AMOUNTS DEPOSITED OR PROFITS EARNED ON TRANSACTIONS WITH THE COUNTERPARTY. YOUR CLAIM MAY NOT RECEIVE A PRIORITY WITHOUT A PRIORITY YOU ARE A GENERAL CREDITOR  AND YOUR CLAIM WILL BE PAID. ALONG WITH THE CLAIMS OF OTHER GENERAL CREDITORS, FROM ANY MONIES STILL AVAILABLE AFTER PRIORITY CLAIMS ARE PAID. EVEN CUSTOMER FUNDS THAT THE COUNTERPARTY KEEPS SEPARATE FROM ITS OWN OPERATING FUNDS MAY NOT BE SAFE FROM THE CLAIMS OF OTHER GENERAL AND PRIORITY CREDITORS. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FOREX TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. DURING TECHNOLOGICAL CRISIS, ORDERS MAY NOT BE FILLED AS PLACED. TRADING ON A PARTICULAR ELECTRONIC TRADING SYSTEM MAY DIFFER FROM TRADING ON OTHER ELECTRONIC TRADING SYSTEM. OR OTHER MARKET SYSTEMS. IF YOU UNDERTAKE TRANSACTIONS ON AN ELECTRONIC TRADING SYSTEM, YOU WILL BE EXPOSED TO RISK ASSOCIATED WITH THE SYSTEM, INCLUDING THE FAILURE OF HARDWARE AND SOFTWARE. THE RESULT OF ANY SYSTEM FAILURE MAY BE THAT YOUR ORDER IS EITHER NOT EXECUTED ACCORDING TO YOUR INSTRUCTIONS  OR IS NOT EXECUTED AT ALL.. THE BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISK AND SIGNIFICANT ASPECTS OF THE FOREX MARKETS THEREFORE. YOU SHOULD CAREFULLY REVIEW THIS DISCLOSURE DOCUMENT BEFORE YOU TRADE.

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