What is the difference between a Forward Contract, a Limit Order, and an FX Option?
OFX’s risk management tools all help you to manage the risk associated with currency exchange volatility.
- Forward Contracts* allow you to fix a future rate. This lets you lock-in the current exchange rate for a transfer up to 12 months in advance.
- Limit Orders** let you target an exchange rate that suits you or your business. Once it’s triggered we’ll contact you to complete your transfer. This means we’ll watch the market for you.
- FX Options give you the right, not obligation, to transfer at a certain exchange rate and time for an up-front premium. This provides you with protection against adverse market movements while letting you take advantage if the rate moves in your desired direction. The minimum transfer amount is AUD 50,000 or equivalent and is only available for clients based in Australia.
For more information, feel free to reach out to an OFXpert.
*If you book a Forward Contract, it may mean losing out if the market rate improves because you’re contracted to settle at the agreed rate. Read more.
**If you book a Limit Order, it may mean losing out if the market rate continues to move above your target rate. There is no guarantee that your desired rate will be reached. Once the order is triggered, the transfer is binding and cannot be cancelled.