The Swiss Franc, created in 1798 by Swiss cantons, was made the official monetary unit of Switzerland and Lichtenstein in 1859 after the issue of money was restricted to the federal government. Considered as one of the world’s strongest currencies, the Swiss Franc is popular for its low volatility and its low correlation with returns on foreign assets. Historically considered a ‘safe-haven currency’, the Swiss Franc has almost zero inflation. As the sixth most traded currency in the market, the Swiss bank notes have all four national languages printed on them including German, French, Romansh, and Italian.
The two key factors affecting a currency’s value are central bank monetary policy and the trade balance. An easy monetary policy (low interest rates) is bearish for a currency because the central bank is aggressively pumping new currency reserves into the marketplace and because foreign investors are not attracted to the low interest rate returns available in the country. By contrast, a tight monetary policy (high interest rates) is bullish for a currency because of the tight supply of new currency reserves and attractive interest rate returns for foreign investors.
The other key factor driving currency values is the nation’s current account balance. A current account surplus is bullish for a currency due to the net inflow of the currency, while a current account deficit is bearish for a currency due to the net outflow of the currency. Currency values are also affected by economic growth and investment opportunities in the country. A country with a strong economy and lucrative investment opportunities will typically have a strong currency because global companies and investors want to buy into that country’s investment opportunities.
The Swiss Franc futures contract provides a vehicle to assess the relative value of the U.S. dollar compared to the Swiss Franc, manage risks associated with currency rate fluctuations in the currency markets and to take advantage of profit opportunities stemming from changes in rates.
The Swiss Franc denoted as CHF at times, stands for the Confoederatio Helvetica Franc.
The futures contract trades on Globex, the Chicago Mercantile Exchange’s (CME) electronic exchange, trading virtually around the clock. The market opens at 5:00 PM CT and closes the following day at 4:00 PM CT except Friday. On Friday, the market closes at 4:00 PM CT and reopens Sunday at 5:00 PM CT.
One futures contract is 125,000 Swiss Franc and pegged to the U.S. Dollar. The most common contract symbol is 6S.
One price increment or “tick” is $12.50. Therefore, a price move from 1.0050 to 1.0150 is $1,250.
The performance bond or initial margin requirement to initiate one futures contract position is $4,950 (as of November 11, 2015). To control that futures position going forward the maintenance margin is $4,500 (as of November 11, 2015).
The futures contract month listings are available for the next twenty months in March (H), June (M), September (U), and December (Z).
The futures contract’s Last Trading Day (LTD) is 9:16 AM CT on the second business day immediately preceding the third Wednesday of the contract month (usually a Monday). The December 2015 Swiss Franc contract LTD is December 14, 2015 for example.
If a contract is held through expiration, the settlement procedure is a cash settlement in accordance with the CME Daily FX Settlement Procedures.
This particular market trades virtually around the clock (including while the European markets are trading from roughly 2:00 AM CT to 10:30 AM CT and Asian markets are trading from roughly 5:00 PM CT to 2:00 AM CT) and is susceptible to outside markets and fundamental influences.
Visit www.danielstrading.com for additional contract specifications and market information regarding the Platinum futures market.
Sources:
www.cmegroup.com
Futures for FX Traders
Trading futures can be very similar to trading forex. This guide is designed to help you understand the similarities of forex and futures trading.
Risk Disclosure
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.
THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.
TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.
YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.
GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.
