How to trade Forex using the right software

Every commodity trader knows the importance of predictability in trading. Unfortunately, fluctuating exchange rates can often introduce unexpected risks. Treasury departments exist to manage this uncertainty. For commodity traders, using software that makes it easy to manage and hedge risks is essential. In this article, we’ll cover Forex contracts and how to choose the right software for your business.
What is Forex Trading?
Forex stands for Foreign Exchange, or the trading of foreign currencies. This involves exchanging one currency for another, like euros to U.S. dollars, usually via digital platforms. Forex trading operates globally, 24 hours a day, and offers options like forward contracts (where you lock in an exchange rate in advance), enabling businesses to better forecast and manage their currency costs.
Why is Forex trading necessary?
Forex trading is essential for various types of transactions involving foreign currencies. Imagine a company in the Netherlands purchasing goods from the United States and needing to pay in U.S. dollars. If the payment is due in a few months, the dollar’s value may change by then. By exchanging currency earlier or locking in an exchange rate contract, the company can maintain predictable costs and avoid an unexpected rise in the exchange rate.
Or consider a Netherlands-based company buying soybeans from Brazil. The purchased quantity is delivered in two batches to the port of Rotterdam with six months between deliveries. Payment is made upon delivery in USD. The Dutch company must pay $100,000 for each half of the purchased amount. A Treasurer overseeing the company’s USD cash flow can convert euros to dollars if an expected shortfall arises on each payment date. This can be done either on the settlement day at the spot rate or in advance with a “futures” contract. In both cases, Forex is required. Hedging an anticipated shortfall mitigates the risk of an unfavorable exchange rate.
Why you need the right software
In the soybean example, the financial manager must decide if, when, and how to purchase dollars to meet payment obligations. This is where Arantys comes in. With Arantys, you can easily create a Forex contract directly linked to a purchase contract, with all necessary information pre-filled. Another useful feature is the dashboard, where you can view current and future currency positions. Arantys provides an overview of purchase and sales contracts, as well as a real-time view of bank balances retrieved directly from the ERP system. This allows financial decision-makers to quickly assess and act on potential future shortfalls. Income and signed contracts appear in real time on this dashboard.
When a shortfall is identified, you can decide how and when to act. You can immediately buy dollars, place a limit order, or secure a fixed-rate contract. Whatever you choose, Arantys records everything, displaying the cash position in the dashboard so that you always have insight into cash flow.
Conclusion
With seamless integration from Arantys, you gain control over your financial position and create predictability in your financial management. This allows you to focus on commodity trading without worrying about currency risks. After all, no one wants to lose profits due to unfavorable last-minute exchange rates.

Bart Dix
Managing Partner
Want to learn more about Forex hedging with Arantys?
Curious how to manage currency risks and gain real-time cash position insights? Get in touch with me and discover how Arantys helps streamline your financial transactions!