Risk Management
Manage your foreign exchange exposure with expert advice from our foreign exchange specialists.
Omnis FX prides itself on its individually tailored advisory service. Once your designated business consultant has discussed and evaluated your business’s foreign exchange requirements, they can regularly update you with relevant market news and industry forecasts.
For companies that are heavily exposed to currency volatility, pro-active exchange rate risk management can be the difference between a profit and a loss. Unfortunately, many companies do not have the resources to optimise such currency transactions.
Trading Strategies
By using a combination of contract types and market orders, Omnis FX can put together a clear trading strategy and help ease the burden of a constantly changing currency market.
Spot Contracts
A straight forward exchange of currency delivered immediately.
Spot contracts are used by businesses requiring immediate foreign currency and the most competitive exchange rate. Businesses that only require foreign currency occasional would benefit from this type of trade.
Forward Contracts
Fix competitive exchange rates to hedge future currency risk.
A forward contract allows an exchange rate to be fixed for delivery up to 24 months. This protects the business from future adverse currency movements. Forward contracts are ideal for companies who agree sales prices in advance and need to buy from suppliers. In this case profit margins can be fixed in advance.
Market Orders
These are the two common types of market order used in currency risk management:
Stop Loss Order – Enables a business to set a minimum rate at which the desired currencies are exchanged. Stop loss orders are used by businesses to lock in a worst case exchange rate, whilst still benefiting from any favourable currency movement. Stop orders can be monitored closely and amended as the market moves.
Limit Order – Enables a business to set a target exchange rate at which point, if reached, currency will be purchased. A limit order is used by businesses that regularly transfer funds, and wish to capitalise on currency movements.
Combining Orders
In order to effectively manage currency exposure, a stop order is often combined with a limit order to produce a range with an upper and lower currency level. This allows a company to make its currency transactions more predictable as the exchange rate is guaranteed to be within these parameters.
Optimisation of this strategy requires flexibility. The order levels are monitored constantly and in conjunction with client input amended when necessary.
