Forward contracts — fix the exchange rate to protect it from possible fluctuations

Buy or sell currencies in the future by fixing your exchange rate today!

This is what is provided by a forward contract designed to protect companies and individuals against possible risks associated with sharp fluctuations of national currencies. Forward contracts are commonly used by legal entities seeking to protect their business against the risk of non-core losses.

For example, a large industrial enterprise concluded a contract for delivery of equipment in the amount of $1,000,000 with payment due in 9 months. The enterprise is fully satisfied with the terms of the concluded contract under which it must pay 67 million rubles based on the current exchange rate of 67 rubles per dollar. But if the ruble exchange rate falls to 75 rubles per dollar, the amount under the contract will increase by 8 million rubles, which is something that the financial managers of the enterprise absolutely want to avoid. In this case, it would be advisable to conclude a forward contract. With a leverage of up to 1:50 provided by Alfa-Forex, the enterprise needs to contribute not more than 10% of the amount of the forward contract to ensure that in the future it will have favorable contract terms with a fixed dollar exchange rate.

Recently, an increasing number of private investors are using this instrument to hedge against risks associated with large purchases, whether it is real estate abroad or contracts for University education of their children. There are also many people who use forward contracts to generate additional profits on the financial markets, and this approach is justified as a significant advantage of USD/RUB forward contracts compared to USD/RUB currency pair is an absence of swaps. To put it simply, this trading instrument is ideal for long-term trading because there are no commission fees for the rollover of a transaction to the next day, which brings higher savings to the trader.

An example of a USD/RUB Forward Contract transaction

Let us consider a typical situation that can occur at a large industrial enterprise. To ensure its continued operations, an industrial enterprise concluded a contract for delivery of equipment in the amount of $1,000,000 with payment due in 9 months. The enterprise is fully satisfied with the terms of the concluded contract under which it must pay 67 million rubles based on the exchange rate of 67 rubles per dollar. But if the ruble exchange rate falls to 75 rubles per dollar, the amount under the contract will increase by 8 million rubles, which may lead to serious financial problems.

To protect itself from such scenarios, the enterprise decides to conclude a forward contract. As a result, even if in 9 months the dollar exchange rate rises to 75 rubles, the enterprise will pay $1,000,000 under the contract at the rate of 67 rubles per dollar and so will avoid the impact of currency fluctuations on its business operations.

Benefits of forward contracts
at Alfa-Forex

Flexibility. An opportunity to conclude USD/RUB forward contracts
Affordability. The minimum transaction amount is 0.01 lot
Leverage of up to 1:50
Convenience. MetaTrader 5 desktop and mobile platform

How to become a client

Open an account
Your capital is at risk. Please trade wisely.

Trading Terms on CFD

Contract Specifications Margin Requirements
Symbol Spread Contract size Limit&Stop levels, points Long swap**** Short swap**** Expiration
SEP/RUR 100 points 100 000 USD 150 0 0 14.09.2018
DEC/RUR 100 points 100 000 USD 150 0 0 14.12.2018
MAR/RUR 100 points 100 000 USD 150 0 0 15.03.2019
JUN/RUR 100 points 100 000 USD 150 0 0 14.06.2019

1. Alfa-Forex reserves the right to adjust the spread value depending on the market situation—that is, in periods of increased volatility and/or limited liquidity on the market.
2. These specifications apply only to the MetaTrader5 trading platform.

* Forward contracts for the USD/RUB currency pair.
** The value of the spread decreases with approaching expiration. This indicates the minimum value.

Symbol Leverage**** / Stop Out Level
«Equity***»
below $50 000
«Equity***»
from $50 000 to $2 000 000
«Equity***»
from $200 000 to $2 000 000
«Equity***»
above $2 000 000
SEP/RUR 1:50 / 20% 1:25 / 20% 1:20 / 30% 1:20 / 40%
DEC/RUR 1:25 / 20% 1:20 / 20% 1:10 / 30% 1:10 / 40%
MAR/RUR 1:25 / 20% 1:20 / 20% 1:10 / 30% 1:10 / 40%
JUN/RUR 1:25 / 20% 1:20 / 20% 1:10 / 30% 1:10 / 40%

1. These specifications apply only to the MetaTrader 5 trading platform.
2. Stop Out level is activated at the first market price when the margin is below the specified level.

* Forward contracts for the USD/RUB currency pair.
** With these parameters, the leverage can be changed at any time convenient for Alfa-Forex.
*** Is calculated according to the total Equity of all trading accounts in a Personal area.
**** According to the requirements of Cyprus Securities and Exchange commissions (CySEC), the following trading conditions are effective for the clients that passed the regulators questionnaire. You may pass the questionnaire inside client''s Personal area.

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Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Read full risk disclosure.

Risk Warning: 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Read full full risk disclosure.

Risk Warning: 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Read full full risk disclosure.