RMIT Classification: Trusted

Risk Management
BAFI3192
Preparation for the Dealing Session
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THE DEALING ROOM

• The Desks
o Round 1: All groups are corporations

• The Phones
o This is an “over the counter” market - you negotiate deals via
Stocktrak.
• Team structure
o 3 people per desk: 2 trading and 1 recording the deals. We
encourage you to change roles from time to time.

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MARKET RULES
CORPORATION (Price Taker)

• Look for the rates in Cash Spot and Forex.

• Make decision based on your research and speculation to achieve

your goals

• If you think the price will go up, use buy and sell

• If you think the price will go down, use short and cover
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PRICES & RATES

The Price Maker sets the bid and offer
• Bid : The price at which trader (price maker) is prepared to
buy the commodity currency.
• Offer or Ask: The price at which a trader (price maker) is
prepared to sell the commodity currency.
• Presented as Bid/Offer or Bid-Ask

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SPOT FOREIGN EXCHANGE

Example: AUD/USD = 0.9462 1 AUD = 0.9462 USD

AUD commodity currency / USD terms currency

This gives the price of the AUD ‘in terms of’ the USD.

Examples: Spot AUD/USD = 0.9461 – 0.9463

o The price maker will buy 1 “AUD” in exchange for 0.9461 USD and will sell
1 AUD for 0.9463 USD.

o The price taker can sell 1 “AUD” for 0.9461 USD and buy 1 AUD for 0.9463
USD.

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Spot AUD/USD = 0.9461 /63

As the PRICE MAKER I will As the PRICE TAKER I will SELL
BUY AUD at my BID rate of AUD at the price maker’s BID rate
0.9461 of 0.9461
Quoting

Calling
As the PRICE MAKER I will SELL As the PRICE TAKER I will BUY
AUD at my ASK rate of 0.9463 AUD at the price maker’s ASK rate of
Quoting 0.9463

Calling
Price Maker Price Taker 6
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Spot AUD/USD = 0.9461 /63

As the PRICE MAKER I will As the PRICE TAKER I will SELL
BUY USD at my ASK rate of USD at the price maker’s ASK
0.9463 rate of 0.9463
Quoting

Calling
As the PRICE MAKER I will SELL As the PRICE TAKER I will BUY
USD at my BID rate of 0.9461 USD at the price maker’s BID rate of
Quoting 0.9461

Calling
Price Maker Price Taker 7
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FX Trading
• Pay attention to margin

• Margin can be found here:

https://www.stocktrak.com/content/index?url=forex-margin-requirem
ents

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