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Posted June 2nd, 2011 by Charles Purdy

Order to Buy/Call – Explained

What is an ‘Order to Buy’?

If you need to move money into a foreign account but have not yet seen a rate that suits your budget, speak to a specialist. They will talk you through the process of moving your money abroad and will also be able to give you a guided estimate of the way the exchange rates are going. If you have a set budget that you wish to stick to, you can agree with your trader in advance, a rate at which you would be happy to purchase your currency at.

The trader will then keep a look out for the rate agreed and when that rate is reached, they will aim to buy your currency on your behalf. The ‘Order to Buy’ contract is ideal for those who do eventually need to transfer money abroad, but who are not under any time pressures or constraints. Although the rate market can never be predicted, traders can estimate how it will move due to the history of the rate trends. This means they can say whether the Order to Buy is the right option for you. If it is not the best option for your situation, a specialist can advise you on which other contract to take out.

What is an ‘Order to Call’?

An ‘Order to Call’ is much the same thing as an ‘Order to Buy’, however in this instance; the trader will call the client when the exchange rate hits a designated spot and see if they wish to pursue the purchase, rather than automatically purchasing the currency for them.

A typical example of this could be:

Jack had decided to move from the UK to Australia. He wanted to rent a house down under whilst he found his feet and made money. In total, Jack had managed to save £50,000 which he intended to move across into an Australian account. The only problem was, Jack didn’t know when to move his money. Not too familiar with the currency rates, Jack wondered if he would get a better rate if he waited a few months.

After much deliberating, Jack decided to call Smart and see what they advised. Having spoken with a helpful trader, Jack opted for the ‘Call to Buy’ option, the current rate was AUD $2.05 to the £1. Jack agreed with his trader that he would be happy to purchase his Australian dollars if and when the rate hit AUD $2.18 to the £1.

Nine weeks later, Jack received a phone call from his Smart trader to say that the rate had his designated $2.18, and did Jack want to go ahead and purchase his dollars there and then? Jack had already calculated that he would be saving around AUD $7,000 if the rate hit the target, so he went ahead and bought the currency over the phone.

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