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Forex Assets

Asset Analysis – Comprehending The NZD/NOK Exotic Forex Pair

Introduction

NZD/NOK is the abbreviation for the currency pair New Zealand dollar versus the Norwegian Krone. It is referred to as an exotic cross-currency pair. In this case, NZD is the base currency, and NOK is the quote currency. In this article, we shall learn about everything you need to know about this currency.

Comprehending NZD/NOK

Understanding the value of a currency pair is simple. The value of NZD/NOK verifies the Norwegian Krone that must be paid to buy one New Zealand dollar. It quoted as 1 NZD per X NOK. For instance, if the current value of NZD/NOK is 6.0549, then 6.0549 NOK is required to buy one NZD.

Spread

Spread is the keyway through which stockbrokers make income. The selling price and buying price are different; the distinction between these prices is termed as the spread. It ranges from broker to broker and their implementation type. Below are the spreads for NZD/NOK currency pairs in both ECN & STP account models:

ECN: 20 pips | STP: 25 pips

Fees

For every execution, there is a cost levied by the broker. This cost is also indicated as the commission/fee on a trade. This fee/commission does not apply to STP accounts; however, a few additional pips are charged.

Slippage

Slippage is the difference in the price executed by you and the price you indeed received. It occurs on market orders. Slippage varies on two factors:

  • Market’s volatility
  • Broker’s execution speed

Trading Range in NZD/NOK

The trading range is a tabular description of the pip movement in a currency pair in a variety of timeframes. These values help in evaluating the risk-on trade as it defines the minimum, average, and maximum profit that can be made on a trade.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

NZD/NOK Cost as a Percent of the Trading Range

The total cost of the trade shifts/changes based on the volatility of the market; hence we must figure out the instances when the costs are less to place ourselves in the market. The table below exhibits the variation in the costs based on the change in the market’s volatility.

Note: The ratio signifies the relative scale of costs and not the stable costs on the trade.

ECN Model Account

Spread = 20 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 20 + 8 = 33 

STP Model Account

Spread = 25 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 25 + 0 = 30

The Ideal way to trade the NZD/NOK

NZD/NOK is an exotic currency pair, and hence we can see, the average pip movement in 1hr timeframe is 120, which indicates higher volatility. The greater the volatility, the higher is the risk, and smaller is the cost of the trade and the other way around. Taking an instance, we can see from the trading range that when the pip movement is smaller, the charge is elevated, and when the pip movement is higher, the charge is lower.

To further decrease our costs of trade, we may place trades using limit orders as an alternative to the market orders. In the below table, we will see the interpretation of the cost percentages when limit orders are applied. As we can see, the slippage is zero. In doing so, the slippage will be excluded from the calculation from the total costs. And this will help us in lowering the trading cost by a sizeable margin. An example of the same is given below.

STP Model Account (Using Limit Orders)

Spread = 25 | Slippage = 0 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 25 + 0 = 25

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Forex Assets

Everything About Trading The NZD/RON Forex Exotic Pair

Introduction

NZD/RON is the acronym for the New Zealand Dollar against the Romanian Leu. It is categorized as an exotic-cross currency pair that usually has a low trading volume. Here, the New Zealand Dollar is the base currency, and the Romanian Leu (on the right) is the quote currency. The RON (Romanian Leu) is the formal currency of Romania, and one RON is further divided into 100 bani.

Understanding NZD/RON

To identify the relative value of one currency, we require another currency to compare. If the base currency’s value comes down, the value of the quote currency goes up and contrariwise. If the market cost of this pair is 2.7393, then this amount of RON is required to buy one unit of NZD.


Spread

Foreign exchange brokers have two separate prices for currency pairs, which are categorized as the ask and bid price. The offering price is the bid price, and the buying price is the asking price. The difference between the bid/ask price is recognized as the spread. The spread is how stockbrokers make their revenue. Below are the spreads for NZD/RON currency pairs in both ECN & STP brokers.

ECN: 35 pips | STP: 40 pips

Fees

A Fee is a payment we pay to the broker each time we open a spot. There is no additional payment charged on STP accounts, but a few extra pips are charged on ECN accounts.

Slippage

Slippage is the difference between the trader’s predicted price and the actual price at which the trade is implemented. It can appear at any given time but often arises when the market is moving fast and is volatile.

Trading Range in NZD/RON

The amount of money we earn or lose in a timeframe can be estimated using the trading range table. It is an example of the minimum, average, and maximum pip movement in a currency pair. This can be measured simply by using the ART indicator with 200-period SMA.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

NZD/RON Cost as a Percent of the Trading Range

The cost of trade generally differs on the broker and differs based on the volatility of the market. This is because the total cost also comprises slippage and spreads, excluding the trading fee. Below is the understanding of the cost variation in terms of percentages. The insights of it are discussed in the subsequent sections.

ECN Model Account

Spread = 35 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 35 + 8 = 48  

 

STP Model Account

Spread = 40 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 40 + 0 = 45

The Ideal way to trade the NZD/RON

Understanding the above tables is pretty simple. The percentage values are directly relative to the total cost of the trade. It is seen that the percentages are relatively high on the minimum column and vice versa. Now, coming to the best time to enter the market, it is when the volatility of NZD/RON is somewhere near the avg pip movement. Trading in such minutes will guarantee low costs as well as lower liquidity.

Speaking about timeframes, trading in 4H and Daily timeframe would be great, as the cost is manageable, and the trade is also not very time-consuming.

Another simple hack to cut down the cost is by trading using limit/pending orders instead of market orders. This will considerably lower costs on a trade because the slippage on the trade becomes 0. It many cases, the cost lowers by about 50% of the original value when we use limit orders.

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Forex Assets

How Expensive Is It To Trade The CHF/SAR Forex Exotic Pair?

Introduction

CHF/SAR is the acronym for the Swiss Franc against the Saudi Riyal. It is classed as an exotic currency pair as it usually has moderate trading volume. In this case, the Swiss Franc (on the left) is the base currency, and the Saudi Riyal (on the right) is the quote currency. The SAR (Saudi Riyal) is the official currency of Saudi Arabia, and one SAR is divided into 100 halalas.

Understanding CHF/SAR

To find out the comparative value of one currency, we require an additional currency to compare. If the base currency’s value goes down, the value of the quote currency moves up and contrariwise. If the market cost of this pair is 4.0742, then this amount of SAR is required to buy one unit of CHF.

Spread

Forex brokers have two distinct prices for currency pairs, which are classified as the bid and ask price. The bid price is the offering price, and ask is the buy price. The distinction between the ask and the bid price is known as the spread. The spread is how brokers make their income. Below are the spreads for CHF/SAR currency pairs in both ECN & STP brokers.

ECN: 9 pips | STP: 14 pips

Fees

A Fee is basically the compensation we pay to the broker each time we execute a spot. There is no compensation charged on STP account models, but a few additional pips are charged on ECN accounts.

Slippage

Slippage refers to the distinction between the trader’s anticipated price and the original price at which the trade is executed. It can occur at any time but often occurs when the market is fast-phased and volatile. Also, sometimes slippage occurs when we place a large number of orders at the same time.

Trading Range in CHF/SAR

The amount of money we will earn or lose in a specific timeframe can be evaluated using the trading range table. It is an illustration of the minimum, average, and maximum pip movement in a currency pair. This can be assessed simply by using the ART indicator with 200-period SMA. 

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/SAR Cost as a Percent of the Trading Range

The cost of trade widely varies on the broker and differs based on the volatility of the market. This is because the total cost also includes slippage and spreads, excluding the trading fee. Below is the interpretation of the cost variation in terms of percentages. The understanding of it is discussed in the subsequent sections.

ECN Model Account

Spread = 9 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 9 + 8 = 22

STP Model Account

Spread = 14 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 14 + 0 = 19

The ideal way to trade the CHF/SAR

The CHF/SAR is an exotic-cross currency pair, and it is volatile. For example, the average pip movement on the 1H timeframe for this pair is ~37pips. From the earlier tables, it is clear that the higher the volatility, the lower is the cost of the trade. Nevertheless, this is not an added benefit, as it is risky to trade when the markets are incredibly volatile.

Trading in such timeframes will ensure low expenses just as reduced liquidity. It will also involve fewer costs by placing orders using limit/pending orders instead of market orders. This will substantially reduce the total cost with slippage being zero.

STP Model Account (Using Limit Orders)

Spread = 14 | Slippage = 0 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 14 + 0 = 14

While reading the above tables, if the ratios are larger, more significant are the trade costs. Likewise, if the proportions are small, lower are the costs. This can be inferred as the trading costs are more significant for low volatile markets and smaller for high volatile markets. I hope this article will support you to trade this pair in a much efficient way. Cheers!

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Forex Assets

Everything About Trading The CHF/THB Forex Exotic Pair

Introduction

CHF/THB is the abbreviation for the Swiss Franc against the Thai Baht. It is classified as an exotic-cross currency pair as it usually has a low trading volume. In this case, the Swiss Franc (on the left) is the base currency, and the Thai Baht (on the right) is the quote currency. The THB is the official currency of Thailand, and it is further split up into 100 satangs.

Understanding CHF/THB

The market price of CHF represents the value of THB that is required to purchase one CHF(Swiss Franc). It is quoted as 1 CHF per X THB. If the market cost of this pair is 34.350, then this amount of THB is required to buy one unit of CHF.

Spread

The distinction between the asking price and the offering price is labeled as the spread. ECN and STP account model will have various spread values; The approximate spread values of CHF/THB pair in both the accounts are mentioned below:

ECN: 30 pips | STP: 35 pips

Fees

The fee is the commission that one pays while entering a trade. A few extra pips are charged on ECN accounts, but there is no fee charged on STP accounts.

Slippage

The mathematical difference between the price expected by the trader and the given price by the broker can be termed slippage. Its cost varies on two factors, i.e., the market’s high volatility and broker’s implementation speed.

Trading Range in CHF/THB

The trading range helps us understand the minimum, average, and maximum pip movement in various time frames. These values assist us in determining the risk, which could be caused by trade. The same is in shown in the below table:

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/THB Cost as a Percent of the Trading Range

The cost variations in trade can be determined by applying the total cost to the table mentioned below. The cost percentage of the trading range represents the difference in fees on the trade and various time frames for differing volatility.

ECN Model Account

Spread = 30 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 30 + 8 = 43 

STP Model Account

Spread = 35 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 35 + 0 = 40

The Ideal way to trade the CHF/THB

The CHF/THB is an exotic-cross currency pair, and this market’s volatility is moderate. For instance, the average pip movement on the 1H timeframe is 51 pips. We should understand the higher the volatility, the lower will be the cost to implement the trade. However, this is not an added advantage as trading in a volatile market means more risk.

For example, in the 1M time frame, the Maximum pip range value is 1984, and the minimum is 310. When we evaluate the trading fees for both the pip movements, we can see that for 310pip movement fess is 13.87%, and for the 1984 pip movement, the fee is only 2.17%. With the mentioned example, we can conclude that trading the CHF/THB currency pair will be comparatively expensive.

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Forex Assets

Trading Costs Involved While Trading The ‘CHF/CNY’ Exotic pair

Introduction

CHF/CNY is the abbreviation for the Swiss Franc against the Chinese Yuan. It is categorized as an exotic-cross currency pair with moderate volatility and low trading volume. Here, the Swiss Franc (on the left) is the base currency, and the Chinese Yuan (on the right) is the quote currency. The Chinese Yuan(CNY) is also known as the Renminbi, which is also the official currency of China.

Understanding CHF/CNY

The market price of CHF represents the value of CNY that is compelled to purchase one CHF. It is quoted as 1 CHF per X CNY. If at all the market price of this pair is 7.5423, then this amount of CNY is required to buy one unit of CHF.  

Spread

The distinction between the asking price and the offering price is termed as the spread. ECN and STP account models will have different spread values. The estimated spread values of CHF/CNY pair in both the accounts are mentioned below:

ECN: 19 pips | STP: 24 pips

Fees

The fee is the commission that one pays for the trade. There is no commission charged on STP accounts, but a few additional pips are charged on ECN accounts.

Slippage

The variation between the trader’s expected price and the executed price offered by the broker is referred to as slippage. Its cost varies on the volatility of the market and the broker’s implementation speed.

Trading Range in CHF/CNY

The trading range is represented in a tabular form to understand the pip movement of a currency pair in different timeframes. These values help us determine the profit, which will be generated from trade. To obtain the worth, you will need to multiply the below pip value with the volatility value.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/CNY Cost as a Percent of the Trading Range

We can ascertain the cost variations in trade by implementing the total cost to the below-mentioned table. The values are achieved by identifying the proportion between total cost and volatility value, and they are represented in the form of a percentage.

ECN Model Account

Spread = 19 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 19 + 8 = 32

STP Model Account

Spread = 24 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 24 + 0 = 29

The Ideal way to trade the CHF/CNY

Understanding the above table is very simple. The proportion of the total cost of trade is directly relative to the value. It is seen that the rates are approximately high on the minimum section and the other way around. The perfect time to enter the market might be where CHF/CNY’s volatility is between the average pip movement.

To lower your risk, it is recommended to trade when the volatility is near the minimum levels. In this case, the volatility is low, and the costs are marginally high compared to the average and the max values. But, if your primary worry is on lowering costs, you may trade when the market volatility is close to the maximum values.

Trading in such timeframes will assure low expenses just as smaller liquidity. It will also include fewer costs by placing orders using limit/pending orders instead of market orders. This will substantially reduce the total cost with slippage being zero.

STP Model Account (Using Limit Orders)

Spread = 24 | Slippage = 0 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 24 + 0 = 24

I hope this article will aid you to trade this pair in a much efficient way. Cheers!

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Beginners Forex Education Forex Assets

How Many FX Currency Pairs Should We Trade?

Last month a private symposium was held in Las Vegas, Nevada, sponsored by a narrow circle of international forex traders. The event hosted more than seventy high-profile traders from around the globe. Traders were debating about some of the most sensitive topics and the ways of risk managing. What came up as the most important topic was: On how many currencies should we focus on during the trading session? What is the right balance between our abilities and the optimal number of seized opportunities? And does more trades mean more profits if we are consistent?

Among all the exotic currencies that are out there, here we want to focus on eight majors: the USD, Euro, Pound, Aussie, CAD, NZD, JPY, CHF. If we take a combination of those eight major currency pairs and minus one, we will end up with twenty-seven. Yes twenty-seven, all the cross pairs, minors, and majors, however, you name them.

Why minus one? According to some professional prop traders, EUR/CHF is the least trending pairs, therefore in a positive correlation. The euro/Swissy has been tied together for such a long time that it doesn’t really trend in a way where it can trip our algorithm and where we can actually earn money. It is simply not worthy of our time, it might be a headache for now if you are a trend following trader as these professionals are. Focusing on this question from a different kind of angle might just be integral in changing our forex trading forever, regardless of how long we are trading, how successful or just in the process of learning.

For those people who trade a lot less than twenty-seven, like just one, three, four, we want to explain why that might be a gigantic mistake and how the mentality behind that approach might seem downright silly. What could be profitable about trading this way is, after we dive deep into our algorithms, little tools, and indicators that we use, we would have potentially a twenty-seven really good chances for success. Many people don’t do that. Someone who only trades a few different currency pairs or sometimes only one currency pair. Some people only trade euro/dollar because they’re assured that’s the most liquid pair, or they believe that the correct path to benefit is mastering at one currency pair before they move on to a different one.

Liquidity stands for the ability of assets to be sold and bought immediately closest to the market price. The Euro/dollar is the most liquid currency pair which accounts for around 29% transaction volume in the forex market. Therefore many don’t even consider trading with other pairs of currencies. Here we think that the euro/dollar isn’t a great pair to trade, especially if you are a newly-born fish in the sea. For somebody who is a beginner in trading, it has so many obstacles against you. So if you really insist to trade only one pair, don’t make it the euro/dollar. That might be the last pair you should be trading with.

Next thing, the fact that people who trade only one pair because they want to be good at those before moving on the other ones mean they don’t know much. Just because the GBP/USD likes to stay in range or AUD/JPY likes to trend, that doesn’t mean it’s going to do that into the future. A currency pair trends, it falls into a range, it consolidates, it might go crazy right after that…just like every other currency pair out there. If we think that some currency pair is range-bound, the one time it stops being in a range we could be doomed, so we better erase that conviction from our heads.

Currency pairs don’t have their own unique movement, the volatility might be specific but not the movement. If somebody did well trading with euro/Chinese yuan, for example, it is not going to be like that forever, it might be moving through the path that strongly supports the way that particular person likes to trade. All of that is going to change, we need to be careful and pay close attention. We don’t want to develop bad habits.

Further on, we want to trade the daily chart exclusively according to certain trade experts. They believe more than anything that the daily chart is the far superior chart to trade when you are using the trend following strategies. Trend following is also statistically proven to be the best method of trading. Every technical tool, everything that we use works better and more consistently on the daily chart than any other chart out there, according to their experience. Every single time the daily chart turned more consistent results even if we use horrible tools. Trades win more often, and we shouldn’t spend more than twenty minutes managing our positions. So maybe we should consider making that switch or start trading this way from the very beginning.

Probably the biggest reason why we should be trading many more currency pairs than we currently are is that we’re severely limiting ourselves by only trading one, two, three, or four pairs. We want to have a well-balanced system in place and make a lot more money than others who trade with just a few currency pairs. If we trade with twenty-seven pairs we would have much more opportunity for success, we want to open our trading horizons. We need to warm up our algorithms, our little scales that we put together for ourselves on a technical level, we need to duplicate them on twenty-seven different currency pairs on the daily chart and we are always going to be in a comfortable position.

This is how we are going to create the best chance of making the most money possible in the market in the long run. Most of the money-making leading lecturers in a symposium agree on this. If we try to use those trading principles and go trade twenty-seven different currency pairs, all combination of eight majors, exclusively trade daily chart, we might be a lot further ahead than many other traders. Our goal should be to set up our best chances of winning in the forex because, in the end, it is all about winning.

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Forex Assets Forex Trade Types

Trend Trading With Exotic and Volatile Pairs

Is there really anything to fear when trading exotic currencies and volatile pairs?

People tend to approach exotic currencies and volatile currency pairs with a kind of irrational, knee-jerk reaction. They’re either revolted and back away or they’re mysteriously drawn in like a moth circling a porch light. Is this irrationality merited? Does it get you anywhere? Let’s take a look. To unpack this properly, it’s best to approach these two ‘monsters’ separately – starting with exotic currencies.

Exotic Currency Pairs

So, is it worth trading exotic currency pairs? To the untrained observer, it might look like the short answer is simply ‘no, it isn’t worth it’. But this answer has to come with a disclaimer because, in reality, it depends on two other things. First thing’s first, what do we mean when we say “exotic currency? The problem is that one man’s exotic currency is another man’s daily bread. Ask any two traders what their definition of an exotic currency is and you’ll likely get two different answers because there is no actual definition that everybody sticks to. Some people will quite happily identify a less commonly traded combination of the eight major currencies as being exotic.

Take, for example, the euro-AUD combination. It’s easy to understand why they would think of that as exotic since the EUR-AUD pair is traded very rarely indeed compared to just about any pairing with the dollar that you can think of. Even if you pair the dollar with come currencies outside the major eight, like the Swedish krona or the Mexican peso, you will have a combination that is more frequently traded than euro vs. the Aussie dollar.

A better working definition – and one which we’re going to go with here – might be to say that any combination outside the eight major currencies should be considered exotic. And here’s why. The eight major currencies are all part of a network of developed, first-world economies. This isn’t a judgment call, by the way. We’re not saying here that any one country is better than another – what we’re looking for here is stability in terms of the news cycle and unpredictable fluctuations. The fact of the matter is that if you trade outside the major eight currencies, you run a greater risk of an anomalous news event sending the price spinning off in an unpredictable direction and blowing out your stop/loss.

That is simply bad news if you are a good technical trader. To be clear, it’s actually bad for any forex trader. When you step outside of the major eight currencies, it becomes increasingly difficult to keep on top of the news cycle. Of course, unusual news events are going to pop up from time to time no matter what currency combinations you trade but as you move outside the major eight, they will be both more frequent and more violent.

That is not to say that there isn’t something tempting about trading exotic currencies. Many readers will know that when you take a look at exotic pairs, it can look very exciting. This applies even to the currencies that you will most commonly encounter outside the eight major currencies. These include the Chinese yuan, of course, the Mexican peso, the Swedish krona, the Turkish lira, the Russian rouble, and the Indian rupee. Sometimes a pair with one of these can move thousands of pips at a time. It’s easy to look at a movement like that and say to yourself, “If I could just enter one big trade here for a few thousand pips, I could walk away rich!”

Unfortunately, that’s not how it works. It’s easy to get drawn into easy-looking trades like that but the problem – and it’s a big problem – is that some of these currencies can move very dramatically and with no warning and for no clear reason. A big win can be truly tempting but a big loss has the potential to completely wipe you out. The Chinese yuan is interesting here for a couple of reasons. There is no denying that it is traded against the dollar much more than it used to be. However, while we’re still in the US-China trade war, it is best to steer clear of trading the Chinese yuan. The ongoing trade war introduces too much risk into the equation.

How Does One Approach Trading Exotic Currencies?

Firstly, you should venture beyond the eight major currencies and all of the combinations of them only if you have a sufficient amount of experience. In short, there is not a whole lot of benefit to expanding beyond the 28 currency pairs that the eight major currencies offer unless you have completely mastered these first. If you have only been trading for a couple of years or less even, then you are not ready but, if you have a lot of experience under your belt, then venture a little further by all means. But proceed with caution.

Caution being the watchword here, because another thing you will have to do before you do try your hand at trading exotic currency pairs, is a little risk mitigation. One of the ways you can do this is to select a currency outside the major eight that you feel good about exploring and start testing it on demo mode. Your first step is to backtest it by applying your trading methodologies to it historically. Your next step is to forward test it by demoing it for a few months until you have built up both a good sense of how it behaves – especially in terms of its spread vs. ATR. Forward testing is a good way to iron out the kinks in your risk profile and to minimise any surprises that could crop up.

Where to Begin?

If you are determined to expand beyond trading the eight major currencies and feel ready to do so, your first task will be to identify a good currency to get started with. A good place to start might be the Singapore dollar. There are a few reasons that make SGD a good choice. For starters, in many ways, it behaves in a way that’s similar to the Japanese yen, at least for now. It is less volatile than the Japanese yen but we’ll touch upon volatility later in the article and you’ll see that it isn’t a big problem. As with the yen, the main advantage of SGD is that it is impervious to news events that relate specifically to it.

This means that it essentially acts as a kind of blank canvas for the currency you are pairing it with. In a sense, this releases you from having to worry about two currencies simultaneously and allows you to focus your attention on just one. This is as true for the Japanese yen as it is for SGD. Of course, this is how things are at the moment and how they have been historically. If Singapore were to be plunged into any kind of turmoil, this would change but, for now, it is surprisingly stable. News events just do not affect it at all.

A Note of Caution

The only real alarm bell regarding the Singapore dollar is that it has a high percentage of spread as compared with its ATR. It is, in fact, likely to have a more lopsided spread vs. ATR percentage than most other currencies you will be trading or even looking at right now. However, as we will cover later in this article, that does not necessarily have to be a problem. Particularly if you do your due diligence and backtest and forward test the currency as discussed. So, don’t let the spread vs. ATR percentages scare you off immediately and take a look at the Singapore dollar if you are keen on exploring exotic currencies.

Managing Volatility

Another one of those things that in many cases gives traders the heebie-jeebies, is trading volatile pairs. Fear is almost certainly a big factor. It’s almost as though it’s the word itself – volatility – that causes a lot of that fear. The good news is that that fear is irrational and can be managed and molded into something useful.

Speed-Phobia

Aside from the word volatility sounding scary, there are two main reasons that traders have an aversion to trading volatile pairs. We will tackle both of them here in turn. The first is that volatile pairs of currencies move fast. They move faster than currency combinations you are comfortable with and that, it seems, makes a lot of people back away. The thing is, there is no real reason it should. Understanding the percentages here and using them to your advantage is key. It sounds easy enough, doesn’t it? The thing is, if you understand the percentages then you will understand that trading a currency combination that moves slowly is exactly the same as trading one that moves quickly.

The key is risk profiling. If you are trading a fast pair, you will have to manage the risk by trading less per pip than you would on a slow pair. If you can manage the risk in that way, you should arrive at a situation where you stand to lose the same on a fast pair as you would on a slow pair, if things go south on you and you hit your stop/loss. Of course, you should never trade the same amount per pip on a slow pair of currencies and a fast pair – if you do, your trading problems are bigger than just accounting for volatility. So, to close down the risk of trading a faster pair of currencies, you have to have a good, well-thought-out risk profile in place. If you can do that, then trading fast-moving currencies should be almost the same as trading slower combinations.

Fear of Spreads

The second thing about volatile currencies that gives most traders pause is something we saw earlier with the Singapore dollar. Volatile currencies will have a high spread vs. ATR ratio. The way to combat that is to pull away from your five-minute chart and trade on a longer time-scale like your daily chart. Trading on a daily chart will negate almost all of the effects of spread vs. ATR from volatile currency pairs. If you trade the daily chart, particularly for volatile combinations, you just won’t have to worry about spreads anymore. You will never again look at a currency pair and decide not to trade it because it looks too volatile based on its spread vs. ATR. If you’re looking at it from a five-minute chart perspective, then the high spread vs. low ATR is certainly something you will want to avoid. But don’t forget that it is a hurdle that can be overcome with a different approach. That approach is to go to trade your daily chart.

So by applying the right kind of risk profiling and modifying your trading to take in the daily chart, you can turn the fear of volatile currency pairs into gold. And it won’t be because you overcame your fears like some zen master, through meditation and self-improvement, it will be because you’ve applied smart trading techniques and knowledge to overcome something that was otherwise irrational with a well-considered, methodological approach to a problem.

Time to Recap

Approach exotic currencies with a dose of caution. Make sure you have the experience to know what you are doing and do not trade outside the eight major currencies until you know the risks that go with exotic currency pairs and the knowhow to overcome them. Carefully choose your starting currency and make sure you do your due diligence by properly back and forward testing it thoroughly. Ultimately, if you’ve only been trading for a couple of years, there is no good reason to trade outside the major eight currencies.

Finally, there is no reason to fear volatility. If you approach what initially looks scary with a rational, considered approach, including careful risk profiling and an awareness of when to trade the daily chart, you never need fear volatility ever again.

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Forex Assets

Trading The CHF/MYR Exotic Forex Pair & Comprehending The Costs Involved

Introduction

CHF/MYR is the abbreviation for the Swiss Franc against the Malaysian Ringgit, and it is considered an exotic currency pair. In this case, the CHF is the base currency, and the MYR is the quote currency. The franc is the official currency of Switzerland and Liechtenstein, while MYR is the official currency of Malaysia.

Understanding CHF/MYR

The market value of CHF/MYR defines MYR’s value that is obliged to buy one franc. It is priced as 1 CHF per X MYR. If the price of the pair is 4.5465 in the market, then these many Malaysian ringgit units are required to buy one CHF.

Spread

The distinction in price between the bid and ask price is determined as Spread. Bid and ask prices are set by the broker. This pip difference is where most of the brokers generate their revenue. Below are the Spread values of CHF/MYR Forex pair in both ECN & STP accounts.

ECN: 44 pips | STP: 49 pips

Fees

The fee is the price you spend on each spot you open with the broker. There is no fee imposed on STP account models, but a few extra pips are charged on ECN accounts.

Slippage

The difference between the price at which, trader implements the trade, and the price he receives from the broker is termed Slippage. This fluctuates based on the broker’s execution speed and the market’s volatility.

Trading Range in CHF/MYR

The total money you will gain or lose in a particular timeframe can be measured utilizing the trading range table. This represents the maximum, average, and minimum pip movement in a currency pair.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/MYR Cost as a Percent of the Trading Range

The cost of trade alters based on the volatility of the market. This is for the reason that the total cost involves Slippage and spreads apart from the trading fee. Below is the interpretation of the cost variant in terms of percentages. The understanding of it is reviewed in the following sections.

ECN Model Account

Spread = 44 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 44 +8 = 57

STP Model Account

Spread = 49 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 49 + 0 = 54

Trading the CHF/MYR

The CHF/MYR is not an extremely volatile currency pair. For instance, the average pip movement on the 1H timeframe is only 84 pips. Note that the elevated the volatility, the smaller is the cost of the trade. However, this cannot be considered a benefit as it is risky to trade extremely volatile markets.

Also, the higher or lesser the percentages, the higher or lower are the costs on the trade. We can conclude that the costs are elevated for low volatile markets and high for extremely volatile markets.

To reduce your risk, it is proposed to trade when the volatility is near the average standards. In this case, the volatility is low, and the costs are slightly high related to the average and the maximum values. But, if your primary concern is on lowering costs, you may trade when the market volatility is near the maximum values.

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Forex Assets

Trading the EUR/USD Pair the Prop Traders Way

Prop traders are the elite in the trading game on Forex. They do this for a living and their gains are consistently way better than with any treasury note, saving account interest, and even mutual funds investment. If you are not new to Forex you have probably heard about the 99% of traders that breakeven or lose their accounts on Forex. The 1% that consistently win know what they are doing and proprietary traders are the top 10% of that group. When you are starting, it is almost certain you are trading on the EUR/USD currency pair. You are not aware of what is underneath the EUR/USD nice clothes. Here is what a prop trader by the name of VP from the Maverick FX prop company team has to say about this.

This is the most traded currency pair on Forex. Prop companies at its core are a team of elite traders that collaborate and excel at capturing the profits out of this market. They discuss what is going on, what is the best course of action and they release the report or a signal. The signal serves to other traders as to what is estimated to happen with a specific forex asset in a specified timeframe. More often than not, these signals are correct. As per their words, the EUR/USD pair is mostly avoided in their signals.

The 99% group we have mentioned above is trading the EUR/USD, the one that loses or breakeven at best in the long term. EUR/USD is also the most popular pair to start with. According to prop traders, trading with this pair is like having an affair with a celebrity. You will get burnt at the end. Before we move on with reasons, let’s understand what made prop traders to this position. It starts with a concept, a trading theory, strategy, indicator, tool, or method. All this is tested in different ways, mostly through practical backtesting and forward testing on various assets and timeframes.

Based on this data a consensus among top traders is made and can be adopted as a viable option trader can use to make consistent results. This has been done for thousands of indicators and theories, they know what works best to date. It turns out they are doing the opposite of what the 99% are doing, and it makes sense. What is even more interesting is the internet is full of popular “tips” majority of traders listen and become the 99% group. As you may presume, prop traders do not follow these tips.

Top 5 most traded pairs are the EUR/USD, USD/JPY, GBP/USD, AUD/USD, and USD/CAD. The EUR/USD cap is almost one quarter on the Forex. By looking at these pairs, you can notice they all have one in common, the US Dollar. Is this an issue? Prop traders say yes. But why the EUR/USD is the pair of choice for new traders?

This currency pair is often “offered” to them first, so they start trading exclusively on it. Also, all the rest of the popular tools are promoted to them as something that works. At a few busted accounts they either give up or, if they are open-minded and willing, continue to search out new ways of trading.

Beginner traders think they can get good at one before trying another. It is a common misconception that currency pairs all have a special way of price action. Apart from measured volatility specifics, price movements on every pair do not have any character! GBP/USD can have very calm periods, choppy and calm, volatile and uniform, sideways movement, spikes and it happens in cycles. The EUR/USD is no exception to this. Just when you think you have adapted your tools to it, it will start to behave differently, then again. It is the cyclic way economy manifests and it is also the way on forex. The order moves into chaos, chaos into order. Some strategies work better in one environment. For example, scalping strategies would benefit less volatile periods, while higher timeframe trend following strategies needs momentum and volume which causes volatility.

You will certainly notice the trading session spikes around the same time of course, but if we go back 50 days back or 50 days into the future, your trading results will be completely different. The EUR/USD in 2020 is different than the EUR/USD in 2019. Sticking to just one asset is not only unnecessary and a self-limitation, but it will also affect your account(s). The way to go is finding the pair that is adequate for your system at that time, ignore the others. The bigger the pool of pairs to choose from, the more opportunities where your system works best. This does not mean you should trade every currency pair there is, like extremely volatile/illiquid exotics.

The EUR/USD is the most liquid so that is why new traders focus on it. The EUR/USD is the most traded pair but that also makes it the most popular. Being popular puts you in that 99% group. Here is why this is a problem from different angles. Liquidity does not mean your trades will be more profitable nor it means the asset will have more “reasonable” price action. Retail traders do not have enough capital to move the markets, the liquidity pool is simply too big, at least within the major 8 currencies. Also, prop traders say the price spikes are less often on less popular currency pairs! So the notion of liquidity is better applies only if a pair is very exotic, like TRY/PLN.

Another problem with the EUR/USD having that 99% group is this is a world where big banks and institutions like to mess with them. If you do not know already what the big banks are doing, their manipulation is mostly done where the majority of traders are trading (popular) where they can extract the most money out of. This money goes back into the pool again and the cycle continues. In our Big Banks article, we mentioned that they know where traders’ positions are and move the price against their trades. News events are especially good for this since a lot of trades are focused on certain price levels in short periods.

Talking about the USD, it is a dominant currency and it is also packed with news events and the most manipulated. This brings us to the point where every currency pair with the USD is likely to be affected by this. Luckily, many pairs are not targets for big bank manipulation since they do not have a lot of traders, the 1% group which escape their hands from time to time. So to sum it up, here are some practical tips from prop traders you can apply and compare the results on your accounts:

Trade the EUR/USD only if you know what you are doing, expose less on this market, and do not limit your trading only on one asset. There is no specialization, no currency pair has a special way of price action, only volatility is different, If you are trading on lower timeframes than daily, you will notice volume spikes on certain trading sessions, but then again, every currency has its trading session.

Taking a wrong when you are just starting forex trading can be a danger to your effort. You may become accustomed to a certain asset, strategy, or tools that are not effective, or there are better alternatives you do not know about. This path is unfortunately easy to start walking since there are so many sources available the right paths are not easy to find. Keeping your mind open for other things to try will evolve your trading and your system for the better, it makes sense. Being adaptive will reflect on your system, it will too be adaptive as much as you are. This path is not the easy one, you will need to climb to that 1% group. Forex will filter out the ones who are not persistent, open-minded, emotionally in control, and the ones that gamble.

Source: No-Nonsense Forex channel

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Forex Assets

Trading Costs Involved While Trading The ‘CHF/SEK’ Forex Exotic Pair

Introduction

The acronym of CHF/SEK is Swiss Franc, paired with the Swedish Krona. In this exotic Forex pair, CHF is the official currency of Switzerland and is also the fifth highly traded currency in the Forex market. In contrast, SEK stands for the Swedish Krona, and it is the official currency of Sweden.

Understanding CHF/SEK

In the Forex market, to ascertain the relative value of one currency, we need an alternate currency to assess. The market value of CHF/SEK helps us to understand the power of SEK versus the CHF. So, if the trade rate for the pair CHF/SEK is 9.8418, it means to buy 1 CHF, we need 9.8418 SEK.

CHF/SEK Specification

Spread

Spread is the variable between the ask-bit price that is set at the exchanges. Below are the spread values of the CHF/SEK currency pair in both ECN & STP accounts. The spread charges for ECN and STP brokers for CHF/SEK are given below.

ECN: 45 | STP: 50

Fees

For every place, a trader enters the broker charges some fee for it. A trader must know that this fee is applicable on ECN accounts only and not on STP accounts.

Slippage

Slippage is the price variation between the trader’s execution and at which the broker implemented the price. The variance is due to high market volatility and slow execution speed.

Trading Range in CHF/SEK

A trading range is the interpretation of the volatility in CHF/SEK in numerous timeframes. The values are attained from the Average True Range indicator. One can use the table as a risk management tool to distinguish the profit/loss that a trader is possessed.

Below is a table explaining the minimum, average, and max volatility (pip movement) on a variety of timeframes.  

 Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/SEK Cost as a Percent of the Trading Range

The entire cost of the trade varies based on the volatility of the market. So, we must find out the instances when the costs are less to place ourselves in the market. Below is a table explaining variation in the costs based on the change in the market volatility.

Note: The percentage costs represent the comparative scale of costs and not the fixed costs on the trade.

ECN Model Account

Spread = 45 | Slippage = 5 | Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 45 + 8= 58

STP Model Account

Spread = 50 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 50 + 0 = 55

The Ideal way to trade the CHF/SEK

The two components a trader should consider while trading any security in the markets are – Volatility & Cost. With the help of the above tables, let us evaluate these two factors to trade the CHF/SEK ideally.

We can see that the pip difference is substantially high among the minimum volatility and the average volatility in every timeframe. For a day trader, the objective is to make revenue from the pip movement of the market. But, if there is barely any pip movement in the price, it becomes difficult to make profits out of the market. Therefore, it is perfect to trade when the volatility is at the average value.

The cost increases as the volatility decline, and they are inversely proportional to each other. In other words, highly volatile markets have the lowest costs. However, it is relatively risky to trade markets with higher volatility though the costs are low. Therefore, to maintain stability among the cost and volatility, traders may discover instances when the volatility is close to the average values or a little above it.

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Forex Assets

Analyzing The ‘CHF/AED’ Forex Exotic Pair

Introduction

CHF/AED is the short form for the Swiss Franc against the United Arab Emirates Dirham. It is considered an exotic currency pair. Currencies are always traded in pairs in the Forex market. The main currency in the pair is considered the base currency, while the sequential one is the quote currency.

Understanding CHF/AED

The market value of CHF/AED determines the value of AED required to buy one Swiss Franc. It is priced as 1 CHF per X AED. Hence, if the market price of this pair is 3.8835, these many United Arab Emirates Dirham units are necessary to buy one CHF.

Spread

The spread is the distinction between the ask-bid price. Mostly, these two prices are set by the stockbrokers. The gap between the pip values is through which brokers generate revenue. Below are the ECN & STP Spread values of CHF/AED pair.

ECN: 19 pips | STP: 24 pips

Fees

The fee is the minimum commission you pay to the broker on every single spot you open. There is no fee to be paid on STP accounts, but a few additional pips on ECN accounts.

Slippage

Slippage is the distinction between the price at which the trader implemented the trade and the original price he got from the broker – this changes based on the volatility of the market and the broker’s implementation speed.

Trading Range in CHF/AED

The trading range table will help you determine the amount of money that you will win or lose in every timeframe. This table signifies the minimum, average, and maximum pip movement in a currency pair.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/AED Cost as a Percent of the Trading Range

The price of the trade alters based on the volatility of the market. Hence, the total cost comprises slippage and spreads, excluding from the trading fee. Below is the analysis of the cost difference in terms of percentages.

ECN Model Account

Spread = 19 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 19 + 8 = 32 

STP Model Account

Spread = 24 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 24 + 0 = 29

Trading the CHF/AED

The CHF/AED is not a very volatile pair. For example, the average pip movement on the 1H timeframe is only 42 pips. If the volatility is more significant, then the cost of the trade is low. Nevertheless, it involves a higher risk to trade highly volatile markets.

Also, the higher/lesser the proportions, the greater/smaller are the costs on the trade. We can then determine that the costs are higher for low volatile markets and high for highly volatile markets.

To reduce your risk, it is recommended to trade when the volatility is around the minimum values. The volatility here is low, and the costs are slightly high, corresponding to the average and the maximum values. But, if the priority is towards reducing costs, you could trade when the volatility of the market is near the maximum values.

Benefits on Limit orders

For orders that are implemented as market orders, there is slippage applied to the trade. But, with limit orders, there is no slippage valid. Only the spread and the trading fees will be accounted for estimating the total costs. Therefore, this will bring down the cost noticeably.

STP Model Account (Limit Orders)

Spread = 24 | Slippage = 0 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 24 + 0 = 24

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Beginners Forex Education Forex Assets

The Euro, the Pound, and the Swissy

The title of this article is not some forex movie spinoff, although there is one “bad” currency in this article. Not all things work in forex trading. You will have tools and indicators that are just bad, and unfortunately, they are abundant. Additionally, some currency pairs are not good for your strategy. If you do not know by now, the trend following strategies are the most successful according to many research studies and confirmed by experience. A group of experienced prop traders has more success in certain currency pairs than with others. The most common ones are the EUR/GBP and the GBP/CHF, out of the major 8 currencies. We will discuss these three currencies, and why they are good for trend following trading. Also, some warning signs about trading that could even ruin the best trades out of thee pairs.

Note that all this material is just an opinion by a forex prop trade who is relying on a technical analysis most of the time. Therefore, trend trading like thins involves a lot of systematic, mathematical decision making using indicators in specialized roles. Following the trend and avoiding events that could disrupt it is also one of the elements. This implies the USD is not a really good choice for this trading type. Not that it is impossible to trade, just unlikely as good as involving the EUR, GBP, and CHF. Traders that have been doing this for 10 years say the USD is full of surprises that could ruin what looked like a very consistent trend. There are several reasons for this. The first one is that the USD is heavily manipulated by the big institutions.

One proof of this is the sentiment, every time traders go long, big players go short and move the price and vice versa. The USD pairs are also most traded, or most popular. This is the place where it is easy to counter the majority of traders’ positions. The big banks and institutions will go where the traders’ money is, hence why the USD pairs are also very hard to master, especially for amateur traders who use the same tools as everybody else. News events are also more frequent with the USD pairs, the price will move illogically to the report or doing extreme shakeouts before the move happens. Anytime you see the major events like the non-farm payrolls or interest rates, the market will go crazy, disrupting your strategy and planed trades.

The Power of Tweets

Interestingly, the USD is affected by one more phenomenon – Trump tweets. Whenever the president of the US has some comment, regardless if it is related to the US economy, the media start to make stories and predictions to which forex market reacts. Now, we have one more event to pay attention to, making the USD unforgiving, choppy currency. If you like trading the news, this is not something you could use to your advantage, these events are unpredictable, unlike the reports. There is no “logical” move behind them.

Luckily for every forex trader, there are cross pairs. Cross pairs can be defined as the ones that do not have the USD, among other definitions. Again, most of the traders do not come to these markets for several reasons. Of course, it is ok to specialize on one or a few currency pairs, but we all know the basic rule of the Risk Management, diversification is good for your loss protection, never put all of your eggs in one basket. There will be times your favorite pairs will act differently, your system will have a hard time giving you any gains. If you have a specialized system, it means you will not be able to trade once markets change their face, there will be no market you can migrate your system to.

Options for Trend Followers

Back to the currencies that we think are the good ones for trend followers. The advantages of the EUR come from the currency segregation. The Euro is segregated, it is a currency of many EU countries, and it has low relation to the US economy. The EUR/USD is of course affected by the news events from the US but if we look at the EUR alone, it does not care what the USD is doing. The news that the EUR has are scattered, you will see interest rates of Germany, France, and other strong countries, but the impact they will have on the EU and the EUR is not as strong. The EUR is unlike the CAD, for example, where every bad or good event affects the price of CAD drastically. Also, the EUR news schedule is not as tight as with the USD, they are easy to follow and the ones that are not tied to a specific EU country are those that matter. You can easily plan accordingly when you know the ECB is releasing the decision on the interest rates, for example. You do not have to worry about the tweets or hysterical media that make markets go wild.

Moving on to the GBP, this currency is an oldtimer on forex. It has its own “personality” and is not correlated to anything. Depending on how much you are familiar with the market, you may notice that the EUR and the CHF are somewhat correlated. The USD and the JPY are also similarly correlated, they are both regarded as the safe-haven currencies. The USD and the CAD are correlated because they are both North American currencies. Unlike these, the GBP is not correlated to anything. Because of this, the GBP pairs are on the constant move, the constant move means strong quality trends. More trends mean more gains for trend followers. Sideways movement is bad for trend traders and GBP does this rarely. Just pay attention, when the GBP moves sideways, these ranges are whipsawing faster and higher than with other currencies.

Another specialty about the Pound is that the moves are more extreme, this is easily spotted if we compare the ATR (Average True Range) of GBP pairs and other non-exotics. Similarly to the EUR, GBP news events are also easy to follow. It is common to see the same type of news affect the GBP, fewer surprises – fewer losses. What news events affect major 8 currencies the most would require another article, but it Is important to know the outlines about the GBP, EUR, and CHF.

Coping with Neutrality

The Swissy is very neutral, just as the country politics itself. Very few news events affect the CHF, the only one you need to pay attention to is the Swiss National Bank. Whatsmore, the SNB does not have a lot to say. This means you can leave your trades running, the news will not affect trends as much. Another similar currency to the Swissy regarding this is the JPY. Swissy is also regarded as a safe haven currency, it is common to see it negatively correlated with the equities market but also positively correlated with the EUR. This is not always the case of course although when the Swissy correlates with the EUR the movements are not to the same extent. This trait of the Swissy can be used for so-called Pairs Trading method. Whatsmore, this gives you the ability to “switch” the trend if you have a position with the EUR, move it to the CHF where the news event will not affect it much.

There are moments in the forex market where a certain currency will behave like a major news event was ongoing even though you will not see anything that could cause such a drastic move. AUD might be one of these currencies, but not the CHF, at least not always (remember the CFH flash crash off the peg?). So Swissy is also the currency with few “weird” moves that do not have any arguments. It is usually the big banks play when you see something like this. So predictability is great, always take inherent risk into account with a certain currency. You mat even eyeball some chart and see if it is too choppy for your system, do you see some spikes and are those spikes affected by news which you can predict or not.

This trio can make a lot of gains when paired together. Starting with the EUR/GBP, what is so special about it?. It is the slowest out of the major 8 pairs. According to the ATR, this is what is usually seen and measured on the charts historically. Slow movement can be a good thing when you want more control. The pair is also USD news proof. The relation to the USD news is minor at best so you can focus only on GBP and the EU news, which are easy to follow. The movements on the EUR/GBP are rarely in balance, more often than not there are some trends in this pair. So when you combine something that has slow predictable movements, without much news disruptions and having trends…this is the golden choice for trend traders.

Still, this pair is not on the top of the most traded pairs list, not even close. The analogy of this might be like when most people want to have a trendy iPhone smartphone instead of a Samsung, even though it may not be a good fit for their needs or financial capabilities. According to the reports of professional prop traders, this pair has a great winning percentage. If they have a signal to buy on the GBP, they would rather trade the EUR/GBP than the GBP/USD. They are not even splitting the risk profile on two, just go full on the EUR/GBP. The probabilities they have gathered say it is just better to allocate positions on this pair, even if it means more risk by not diversifying.

Other Pairs to Consider

Moving on to the GBP/CHF, the ATR of this currency pair is higher than the EUR/GBP. The Swissy is a single national currency, unlike the EUR and is sensitive to the GBP movement, boosting the momentum. So if the EUR/GBP is too slow to trigger your trade entry or exit, check this pair as there are similar qualities. To some extent, this causes the pair to be even more trendy than the EUR/GBP. Having better “spool” and consistent trends. Stagnation is not common, at least not for the forex majors pairs standards. As with the rest of the pairs, the news events are not frequent, do not cut the trends, and are predictive. The USD events’ effects are not noticeable. GBP/CHF pair is very very unpopular. As such do not expect those weird price action movements without any news to back it up, nor sudden whipsaws.

The EUR/CHF, well, this is the one to avoid. Consider how much the Swissy is correlated to the Euro. Are the baskets similar? Compare the sideways or consolidation ranges to the GBP. You will understand this is a place where trenders either do not trade a lot or just lose. The stagnation or positive correlation to the EUR can change, at this moment this pair is moving nicely like the CHF is now more expressive in less certain times. Trading the EUR/AUD would be the same as trading the EUR/CHF a while ago before 2018, but now it is a bit different. The correlation will probably start again when the markets get out of the (if) COVID-19 crisis. For now, there is not enough historical evidence to say this pair is not correlated anymore. If you are trading this one, try it with less risk.

These observations can be seen on the charts. When we open the mentioned currency pairs charts in the MT4 or any other trading platform, you will notice the sideways movements on the daily timeframe that could last for a month or two. These are areas you should avoid. Some traders can spot these periods by the naked eye, others rely on indicators. These types of indicators are not common, but this is another subject. Take all of this as advice, especially if you have a trend following system.

A few more warnings or tips for you. When you see the GBP/CHF and the EUR/CHF charts and you have a signal on one but the other is very close to giving one, do not wait for it, go with the first pair with a signal. This hesitation could lead you to miss great trades. Professional prop traders are often calm when they lose a trade, although when they miss significant trends because they are late to the party, they are very self-critical. The second tip or a warning is not to trade GBP/CHF and the EUR/GBP at the same time. Your exposure on the GBP will be doubled, so trade one or split the risk if you have two signals.
To conclude, be aware of the USD, if you trade USD related pairs, go with reduced risk or smaller positions. Find more opportunities with cross pairs, they tend to have better trends, especially the ones mentioned. Finally, the elementary part of your Risk Management setup should be not to overexpose on one currency, remember the eggs and the basket.

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Forex Assets

Asset Analysis – Trading The CHF/BRL Exotic Forex Pair

Introduction

The abbreviation of CHF/BLR is Swiss Franc, paired with the Brazilian Real. In this pair, CHF is the native currency of Switzerland and is also the fifth vastly traded currency in the Forex market. Likewise, BRL stands for the Brazilian Real, and it is the official currency of Brazil. This is classified as an exotic Forex pair.

Understanding CHF/BRL

In the Forex market, to ascertain the relative value of one currency, we need another currency for comparison. When we buy a currency (recognized as the base currency), we are indirectly selling another currency (known as the quote currency). The market value of CHF/BRL helps us to comprehend the power of BRL against the CHF. So, if the trade rate for the pair CHF/BRL is 5.7715, it means to buy 1 CHF, we need 5.7715 BRL.

CHF/BRL Specification

Spread

Spread is the difference among the bid-ask price that is set at the exchanges. Below are the spread values of the CHF/BRL currency pair in both ECN & STP accounts. The spread charges for ECN and STP brokers for CHF/BRL pair are as follows:

ECN: 24 | STP: 29

Fees

For every spot, a trader enters the stockbroker charges a specific fee for it. Traders must know that this fee is charged only on ECN accounts and does not apply to STP accounts.

Slippage

Slippage is the price distinction between the broker executed price and the trader execution price. The difference is caused due to the market’s high volatility and slow execution speed.

Trading Range in CHF/BRL

A trading range is the explanation of the volatility in CHF/BRL in numerous timeframes. The values are attained from the Average True Range indicator. One can use the table as a risk management tool to distinguish the profit/loss that a trader is possessed.

Below is a table indicating the minimum, average, and max pip movement in several timeframes.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/BRL Cost as a Percent of the Trading Range

The total cost of the trade changes based on the volatility of the market, hence we must number out the occasions when the costs are less to place ourselves in the market. The table below displays the variation in the costs based on the change in the market’s volatility.

Note: The ratio represents the relative scale of costs and not the fixed costs on the trade.

ECN Model Account

Spread = 24 | Slippage = 5 | Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 24 + 8= 37

STP Model Account

Spread = 29 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 29 + 0 = 34


The Ideal way to trade the CHF/BRL

With the help of the above tables, let us assess these two factors to the trade the CHF/BRL. Volatility and cost are two elements a trader must consider for trading any security in the Forex market.

In various timeframes, we can see the pip movement being very high between the minimum volatility and the average volatility. As a day trader, the aim is to make profits from the pip variation in the market. It becomes tricky to extract some profits from the market if there are no variations in the pip value.

When the cost goes higher, the volatility of the market decreases. In other words, the market with high volatility have minimal costs. To strike a balance between the volatility and the cost, traders should find an appropriate time when the volatility is close to the average values or slightly about it.

Additionally, traders can also reduce their total costs by placing ‘limit orders’ instead of ‘market orders.’ This will ultimately cut the slippage on the trade and consequently lower the total cost. In the below example, the total cost would decrease by five pips, which is a modest reduction for just altering the type of order execution.

STP Model Account (With Limit Orders)

Total cost = Slippage + Spread + Trading Fee = 0 + 29 + 0 = 29

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Forex Assets

Examining The Volatility Of CHF/TRY Forex Exotic Pair

Introduction

The abbreviation of CHF/TRY is Swiss Franc, paired with the Turkish Lira. In this pair, CHF is the official currency of Switzerland and is also the fifth highly traded currency in the Forex Exchange market. In contrast, TRY stands for the Turkish Lira, and it is the official currency of Turkey. This pair is classified as an exotic pair.

Understanding CHF/TRY

In the Foreign exchange market, to determine the relative value of one currency, we need an alternative currency to evaluate. Hence, when we are buying a currency (base) we are simultaneously selling one (the quote currency). The market value of CHF/TRY helps us to understand the power of TRY against the CHF. So, if the trade rate for the pair CHF/TRY is 7.1972, it means to buy 1 CHF, we need 7.1972 TRY.

CHF/TRY Specification

Spread

Spread is the distinction between the ask-bit price that is set at the exchanges. Below are the spread values of the CHF/TRY currency pair in both ECN & STP accounts. The spread charges for ECN and STP brokers for the CHF/TRY pair can be found below.

ECN: 35 pips | STP: 40 pips

Fees

For every position, a trader enters the stockbroker charges some fee for it. Traders must know that this fee is charged only on ECN accounts and not on STP accounts.

Slippage

Slippage is the price difference between the trader’s execution and at which the broker executed the price. The difference is because of the high market volatility and slow execution speed.

Trading Range in CHF/TRY

A trading range is the interpretation of the volatility in CHF/TRY in several timeframes. The values are obtained from the Average True Range indicator. One can use the table as a risk management tool to identify the profit/loss that a trader is possessed.

Below is a table indicating the minimum, average, and max volatility (pip movement) on various timeframes.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/TRY Cost as a Percent of the Trading Range

The total cost of the trade fluctuates based on the volatility of the market. So, we must figure out the occasions when the costs are less to place ourselves in the market. Below is a table demonstrating the variant in the costs based on the change in the volatility of the market.

Note: The percentage rates represent the relative scale of costs and not the fixed costs on the trade.

ECN Model Account

Spread = 35 | Slippage = 5 | Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 35 + 8= 48

STP Model Account

Spread = 40 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 40 + 0 = 45

The Ideal way to trade the CHF/TRY

Volatility and cost are the two components traders take into consideration for trading any security in the market. With the assistance of the above tables, let us evaluate these two factors to trade the CHF/TRY Forex pair.

As we can see, the pip variation is significantly high between the minimum volatility and the average volatility in each timeframe. As a day trader, our aim is to make income from the market’s pip movement. But, if there is hardly any movement in the price, it becomes tricky to make profits from the market. Thus, it is ideal to trade when the volatility is at the average value.

The cost of trade rises as the volatility decrease. They are inversely proportional. In other words, highly volatile markets have minimum costs. Though it is quite risky to trade markets with higher volatility, it can be considered by aggressive traders with optimal money management techniques in place as the costs are low. Hence, to retain a balance among the cost and volatility, traders may find trading occasions when the volatility is near the average values or a little above it.

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Forex Assets

XPT/USD – How Expensive Is It To Trade This Commodity Asset Class?

Introduction

Platinum is one of the rarest precious metal found in the Earth’s crust. Only a few hundred tons are produced annually. The name Platinum is derived from a Spanish word platina (little silver).

Similar to how other precious metals like Gold and Silver are traded in the exchange market, Platinum is also actively traded in the market. Its ISO code is XPT and is highly traded against the US Dollar with the ticker XPT/USD.

Understanding XPT/USD

Platinum is a precious metal that is measured in troy ounces (Oz). The market price of XPT/USD represents the value of the US Dollar for one troy oz of Platinum. It is quoted as 1 XPT per X USD. For instance, if the current market price of XPT/USD is 814.50, then it means that each oz of Pl is worth 814.50 USD.

XPT/USD Specification

Spread

It is the difference between the bid and the ask prices. The typical spread in Platinum is usually around 700 pips.

Fee

Unlike currency pairs, Platinum is traded as a Contract for difference (CFD). There are three different types of the fee charged for such trades:

  • Commission charge
  • Overnight fee

Thus, the total fee will be,

Total fee = Spread + commission + overnight

For our example, we shall ignore the overnight fee as it completely depends on how long aa trader is willing to hold his positions. So, the revised fee will be,

Total fee = Spread + commission = 700 + 200 = 900 pips

Trading Range in XPT/USD

The trading range is a representation of volatility in the pair for different time frames in a tabular format. It gives the minimum, average, and maximum volatility in the pair for various time frames.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

XPT/USD Cost as a Percent of the Trading Range

Cost as a % of the trading range illustrates the variation in the cost of trade by considering the time frame and volatility of the instrument. Mathematically, it is the ratio of the volatility value and the total cost represented in terms of a percentage.

Total fee = Spread + commission = 700 + 200 = 900 pips

Trading the XPT/USD

Platinum is one of the highly traded commodities in the exchange market. But its trading volume is lesser than Gold Spot and Silver Spot. Nonetheless, it has enough volatility and liquidity for retail traders to participate in the market.

Platinum is primarily driven by supply and demand that comes from fundamental factors. These factors are different from that of Gold and Silver, yet some do apply on Pl. When it comes to technical analysis, all the techniques apply that is used in other markets.

As mentioned, Platinum is traded as CFD, and each trade has a commission, overnight, and spread involved in it. This fee is fixed irrespective of the volatility of the market and the time frame traded. But there is a catch here. Even though the fee is fixed, the fee varies relatively. Meaning, a trader aiming high profit must pay the same fee as a trader aiming for small profits. The former is typically a large time frame trader, while the latter is a trader trading relatively smaller time frame.

Since the timeframe is something that cannot be fixed, one can relatively reduce costs by considering the volatility of the market. As the above table evidently depicts, as the volatility increases, the relative fee on the trade decreases. Thus, one must consider trading when the volatility of the pair is at or above the average volatility.

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Forex Assets

Asset Analysis – Trading The Natural Gas Commodity Asset

Introduction

Natural gas is a soft commodity that is extensively traded in the market, like Crude Oil. The price changes every moment, as it is publicly traded on an exchange. The price of natural gas is determined by supply and demand in the physical market, as well as the demand and supply from the traders in the online market.

Understanding Natural Gas

Trading natural gas in the online market is speculating the short-term price fluctuations. Buying natural gas is only an electronic transaction and does not mean the physical purchase of the commodity.

There are several ways to trade natural gas in the online market. One of the heavily traded ways is through futures contracts. A futures contract is a contract (agreement) to buy or sell an asset at a future price.

Chicago Mercantile Exchange (CME Group) is the route through which nature gas futures is traded. There are many types of natural gas and its contracts that can be traded. However, the most traded contract is the Henry Hub Natural Gas Futures (NG).

Each contract of NG represents 10,000 million British thermal units (mmBtu). In the futures exchange market, NG fluctuates with a minimum of $0.001. In other words, a $0.001 price movement in NG represents one pip (tick). Like pip value in forex, the tick value of NG is $10. For every tick in price, a trader will see a $10 change in P/L.

Natural Gas Specification

Fees Associated with Natural Gas Futures Trading

There are different types of fees involved while trading natural gas futures. Typically, there are four basic fees that a brokerage charges for every futures contract traded:

  • Exchange/Clearing fees
  • National Futures Association (NFA) fee
  • Data fees
  • Brokerage commissions

The types of the fee listed above are either charged “per side” or “round turn” basis. Also, it varies from broker to broker.

Trading Range in Natural Gas

A trading range represents the price fluctuations in natural gas in different time frames. Similar to pips in currency pairs, the price movement in natural gas is represented in ticks, where each tick is an increment of $0.001.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

Cost as a Percent of the Trading Range

Cost a percent of the trading range is the depicts the variation in fees on the trade-in different time frames for varying volatility. It is simply the ratio of the total fee and the tick values.

Total fee (per contract) = $50 (5 ticks) [approx. fee]  

Trading the Natural Gas

Natural gas is heavily traded in the futures market. It is a soft commodity like Crude Oil and is quite popular in the commodity space. Traders speculate on natural gas using both fundamental and technical analysis. The fundamentals of NG vary from that of other commodities, while the technical analysis works perfectly the same as any other asset. The fee structure, too, is pretty different from that of currency pairs, as it is mostly traded in the futures market. However, the total fee is more or less the same.

Understanding the fee variation

The fee is something that varies relatively with the change in time frame and volatility traded. In essence, a trader trading the 1H time frame will have to pay relatively more fee than a trader speculating on the 4H. Due to this, the percentage values are higher on the 1H time frame than the 4H time frame.

Likewise, the relative fee is higher when the market volatility is at the minimum values, even though the time frame remains the same. So, to efficiently manage the fee, one must trade during the times when the market volatility is at or above the average values.

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Forex Assets

Analyzing The Costs Involved While Trading The ‘CHF/BGN’ Exotic Pair

Introduction

CHF/BGN is the abbreviation for the Swiss Franc and the Bulgarian Lev exotic pair. Here, CHF is the base currency, while BGN is the quote currency. The pair as a whole explains the number of units of the quote currency (BGN) that is required to buy a single unit of the base currency (CHF). BGN stands for The Bulgarian Lev, and it is the official currency of Bulgaria.

Understanding CHF/BGN

In the Forex market, we always purchase the base currency while selling the quote currency and vice versa. Here, the market value of CHF/BGN helps us to comprehend the potential of BGN against the CHF. So if the exchange rate of the pair CHF/BGN is 1.8384, it means to buy1 CHF we need 1.8391 BGN.

CHF/BGN Specification

Spread

Spread in exchange is the distinction between the bid-ask price proposed by the broker. It is quantified in terms of pips and fluctuates on the type of account and kind of broker. Below is the spread for the CHF/BGN pair in both ECN & STP accounts.

Spread on ECN: 7 | STP: 12

Fees

Fees are the commission charged by the broker for each trade a trader takes. The fee varies on both types of accounts and brokers. For our analysis, we have maintained the fee flat at five pips.

Slippage

A trader will not get the price that he demands, due to the volatility in the market. The original price varies from the asked price. The difference is termed as slippage. For instance, if a trader performs a trade at 1.8384, the actual price received would be 1.8391. The difference between the two pips is called slippage.

Trading Range in CHF/BGN

The trading range is a tabular interpretation of the min, average, and maximum pip movement in a specific timeframe. Obtaining understanding about this is essential because it helps manage risk and determine the appropriate times of the day to enter-exit a trade with minor costs.

Below is a table representing the minimum, average, and maximum pip movement (volatility) in various timeframes.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHFBGN Cost as a Percent of the Trading Range

The above table illustrates the number of pips the currency pair move in the various timeframe. We will apply these values to identify the cost ratio when the volatility is minimum, average, and maximum. The cost percentage will then help us sort the ideal time of the day to enter the trades.

The understanding of the cost percentage is straightforward. If the percentage is elevated, then the cost is high in that specific timeframe and range. If the percentage is low, then the cost is comparatively low for that timeframe and range. The total cost on every trade is calculated by adding up the spread, slippage, and trading fee.

ECN Model Account

Spread = 7 | Slippage = 5 | Trading fee = 8

Total cost = Slippage + Spread + Trading Fee  = 5 + 7 + 8 = 20

STP Model Account

Spread = 12 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee  = 5 + 12 + 0 = 17

The Ideal way to trade the CHF/BGN

It is not recommended to enter and exit the trade at any time of the day. To manage their trade, a trader must consider various timeframes during the day to reduce both risk and cost of the trade. This is made possible by understanding the above two tables.

In the minimum column, the percentages are generally high. This means the cost is very high when the volatility of the market is low. For example, on the 1H timeframe, when the volatility is three pips, the cost percentage is 666%. This means that one must accept high costs if they enter or exit trades when the volatility is around three pips. Preferably, it is advised to trade when the market’s volatility is above the average.

Additionally, it is considerably better if one trades placing the limit orders instead of market orders, as it invalidates the slippage on the trade. In doing so, the costs of each trade will reduce by approximately 40%.

STP Model Account (Using Limit Orders)

Spread = 12 | Slippage = 0 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 12 + 0 = 12

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Forex Assets

Everything About Trading The CHF/DKK Forex Asset Class

Introduction

The abbreviation of CHF/DKK is Swiss Franc, paired with the Danish Krone. Here CHF is the official currency of Switzerland and is also the fifth highly traded currency in the Forex market. In contrast, DKK stands for the Danish Krone, and it is the official currency of Denmark and the provinces of Greenland and the Faroe Islands.

Understanding CHF/DKK

In the Foreign exchange market, to ascertain the comparative value of one currency, we need an alternative currency to evaluate. Once when we buy a currency, which is identified as the base currency and simultaneously sell the quote currency. The market value of CHF/DKK helps us to comprehend the power of DKK against the CHF. So if the trade rate for the pair CHF/DKK is 6.9915, it means to buy 1 CHF, we need 6.9915 DKK.

CHF/DKK Specification

Spread

A spread is described as a distinction between the buying & offering price of a Forex pair. In other words, it is a distinction between the ask-bid price of an asset. Below is the spread charges for ECN and STP stock brokers for CHF/DKK pair.

ECN: 12 | STP: 17

Fees

A Fee is a cost that we traders pay to the broker for achieving a trade. The Fees differ on the type of broker (STP/ECN) we use.

Slippage

When we want to implement a trade at a specific market rate, but as a replacement for it, the trade gets implemented at a different rate, and that is because of the slippage. Slippage occurs when we deal with a volatile market, and when we execute a large order at the same time.

Trading Range in CHF/DKK

The trading range in the table below will ascertain the amount of money we will gain or lose in each timeframe. We have the interpretation of the minimum, average, and maximum pip movement in a currency pair in the below table. Now we will use the ATR indicator that demonstrates the price movement in a currency pair.

Below is a table demonstrating the minimum, average, and max volatility (pip movement) on numerous timeframes.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/DKK Cost as a Percent of the Trading Range

The price of trade differs on the type of broker and fluctuates based on the volatility of the market. The aggregated cost of trade involves spread, fees, and occasionally slippage if the volatility is high. To reduce the cost of the trade, we can use limit orders as an alternative for market execution.

ECN Model Account

Spread = 12 | Slippage = 5 | Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 12 + 8= 25

STP Model Account

Spread = 17 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 17 + 0 = 22

The Ideal way to trade the CHF/DKK

CHF/DKK is an exotic currency pair. Here, the average pip movement in 1hr timeframe is 99, which implies higher volatility. The greater the volatility, the greater is the risk and low cost of the trade and the other way around. Considering the above tables, we can see from the trading range that when the pip movement is lower, the proportion is high, and when the pip movement is elevated, the proportion is low.

The ratios are higher in the minimum column. This indicates the cost is high when the volatility of the market is lower. For example, on the 1H timeframe, when the volatility is 24 pips, the cost percentage is 104.17%. Meaning, one must accept high costs if they enter or exit trades when the volatility is around 24 pips. So, preferably, it is suggested to trade when the market volatility is higher than the average.

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Forex Assets

CHF/SGD – Trading Costs Involved While Trading This Forex Exotic Pair

Introduction

CHF/SGD is the short form for the Swiss Franc against the Singapore Dollar. It is classified as an exotic Forex currency pair. Currencies in the Forex market are always traded in pairs. The key currency in the pair (CHF) is the base currency, while the subsequent one (SGD) is the quote currency.

Understanding CHF/SGD

The market value of CHF/SGD determines the value of SGD required to buy one Swiss Franc. It is quoted as 1 CHF per X SGD. Therefore, if the market price of this pair is 1.4699, then these many Singapore Dollar units are necessary to buy one CHF.

Spread

The spread is the distinction between the bid-ask price. Generally, these two prices are set by the stockbrokers. The pip contrast is through which brokers generate revenue.

ECN: 12 pips | STP: 17 pips

Fees

The fee is the commission you pay to the broker on each spot you open. There is no fee charged on STP account models, but a few extra pips on ECN accounts.

Slippage

Slippage is the distinction between the price at which the trader implemented the trade and the actual price he got from the broker – this change based on the volatility of the market and the broker’s implementation speed.

Trading Range in CHF/SGD

The trading range table will help you ascertain the amount of money that you will win or lose in each timeframe. This table represents the minimum, average, and maximum pip movement in a currency pair.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/SGD Cost as a Percent of the Trading Range

The price of the trade fluctuates based on the volatility of the market. Therefore, the total cost involves slippage and spreads, excluding from the trading fee. Below is the interpretation of the cost difference in terms of percentages.

ECN Model Account

Spread = 12 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 12 + 8 = 25

STP Model Account

Spread = 17 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 17 + 0 = 22

Trading the CHF/SGD

The CHF/SGD is not a volatile pair. For example, the average pip movement on the 1H timeframe is only 22 pips. If the volatility is higher, then the cost of the trade is low. However, it involves an elevated risk to trade highly volatile markets. Also, the higher/lesser the percentages, the greater/smaller are the costs on the trade. So, we can conclude that the costs are higher for low volatile markets and high for highly volatile markets.

To diminish your risk, it is advised to trade when the volatility is around the average values. The volatility here is low, and the costs are a slightly high matched to the average and the maximum values. But, if the priority is towards lowering costs, you could trade when the volatility of the market is near the maximum values with optimal risk management.

Advantage on Limit orders (STP Model Account)

For orders that are executed as market orders, there is slippage applicable to the trade. But, with limit orders, there is certainly no slippage applicable. Only the spread and the trading fees will be accounted for by calculating the total costs. Hence, this will bring down the cost considerably.

Spread = 17 | Slippage = 0 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 17 + 0 = 17

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Forex Assets

Asset Analysis – Trading The ‘CHF/PLN’ Forex Exotic Pair

Introduction

CHF/PLN is the abbreviation for the Swiss Franc alongside the Poland złoty. It is categorized as an exotic currency pair that usually has high volatility and low trading volume. Here, the CHF is the base currency, and the PLN is the quote currency. CHF is the official currency of Switzerland, whereas PLN is the national currency of Poland.

Understanding CHF/PLN

The current value of the pair represents the value of PLN that is corresponding to one CHF. It is quoted as 1 CHF per X PLN. For example, if the value of this pair is 4.1627, these many units of PLN are required to buy one Swiss Franc.

CHF/PLN Specification

Spread

In trading, the difference between the bid-ask price is described as the spread. Spread normally fluctuates from broker to broker. The estimated spread on ECN and STP accounts is given below.

ECN: 49 | STP: 54

Fees

There is a small fee or payment charged by the broker for each trade a trader does. This varies on both types of accounts and broker. There are zero fees charged on STP accounts, but a few extra pips are charged on ECN accounts.

Slippage

The difference between the cost at which the trader executed the trade and the cost he received from the broker is termed as Slippage. Fundamentally, Slippage hangs on two factors – Broker’s execution & market’s volatility

Trading Range in CHF/PLN

The trading range is a tabular interpretation of the minimum, average, and maximum pip movement in a different timeframe. Having expertise about this is necessary because it helps in handling risk as well as determine the appropriate times of the day to enter and exit a trade with marginal costs. Below is a table that illustrates the minimum, average, and maximum volatility (pip movement) on several timeframes.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/PLN Cost as a Percent of the Trading Range

The number of pips the currency pair change in various timeframes is demonstrated in the table above. With this, we apply these values to get the cost percentage when the volatility is minimum, average, and maximum. This cost percentage will help us sort out an ideal time of the day to enter trades.

The understanding of the cost percentage is easy. If the percentage is above average, then the cost is higher for that specific timeframe and range. If the percentage is at a low level, then the cost is comparatively low for that timeframe and range. Note that, the total cost on a particular trade is calculated by combining the spread, Slippage, and trading fee.

ECN Model Account

Spread = 49 | Slippage = 5 | Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 49 + 8= 62 

STP Model Account

Spread = 54 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 54 + 0 = 59

The Ideal way to trade the CHF/PLN

There are specific times a trader must deal with their trade to decrease both hazard and cost on the trade. This can be made feasible by understanding the above tables. Entering and exiting trades during any time of the day is highly not advised.

The percentages are most elevated in the min column. This means the cost is fairly high when the volatility of the market is low. For instance, on the 1H timeframe, when the volatility is 27 pips, the cost percentage is 218.5%. Meaning, one must bear high costs if they open or close trades when the volatility is around 27 pips. So, ideally, it is proposed to trade when the market volatility is above the average mark.

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Forex Assets

How Best To Trade The ‘CHF/AUD’ Forex Currency Pair?

Introduction

CHF/AUD is the acronym for the Swiss Franc against the Australian Dollar, and it is an exotic Forex currency pair. Here, the CHF is the base currency, and the AUD is the quote currency. Both CHF and AUD are major currencies and are vastly traded in the foreign exchange market. CHF is the official currency of Switzerland, while AUD is the national currency of Australia.

Understanding CHF/AUD

The price of this pair in the trade market defines the value of AUD equivalent to one Swiss Franc. It is quoted as 1 CHF per X AUD. For instance, if the value of this pair is 1.5318, these many Australian Dollars are required to acquire one CHF. 

Spread

The difference between the ask-bid price is referred to as Spread, which is charged by the broker. This value is different in the ECN and STP accounts. The estimated Spreads for CHF/AUD pair is given below.

ECN: 17 pips | STP: 22 pips

Fees & Slippage

A fee is a price that one pays for the trade. There are zero fees charged on STP accounts, but a few pips are charged on ECN accounts. Slippage is the difference calculated between the price by the trader and the price the trader received from the broker.

Trading Range in CHF/AUD

The trading range is represented in the tabular format to showcase the pip movement of a currency pair in various timeframes. These values are useful in ascertaining the profit that can be generated from trade in advance. To discover the trading costs, we must multiply the below volatility value with the pip value of this pair.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHF/AUD Cost as a Percent of the Trading Range

The trading range is obtained by identifying the ratio between total cost and volatility; it expressed in terms of percentage. Below is the representation of the cost differences of traders in various timeframes and volatilities.

ECN Model Account

Spread = 17 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 17 + 8 = 30

STP Model Account

Spread = 22 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 22 + 0 = 27

Trading the CHF/AUD

When the percentage value is higher, the cost of the trade gets more expensive. From the above tables, we can conclude the values are significant in the min column and relatively less significant in the max column. It means that the costs are high when the market’s volatility is low. It is not advisable to trade when both the volatility and cost of trading is high. Balancing both these factors is ideal to trade when the pair’s volatility is in the range of the average values.

Additionally, to lower your costs even further, you can place trades using limit orders instead of market orders. By executing limit orders, the slippage will not be involved in the calculation of the total costs. And this will set the cost of the trades low by a decent number. An example of the same is given below.

STP Model Account (Using Limit Orders)

Spread = 22 | Slippage = 0 |Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 22 + 0 = 22

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Forex Assets

Costs Involved While Trading The XBR/USD Asset Class

Introduction

BCO is an acronym for Brent Crude Oil, which is one of the two types of crude oil and is a benchmark for determining the price of oil, along with West Texas Intermediate (WTI) crude oil. BCO is also known by Brent Blend, Brent Oil, and London Brent. It is the benchmark for the majority of the crude oil from the Atlantic basin, which marks for two-thirds of the crude oil price traded internationally. In the market, it is traded with the ticker XBR/USD.

Understanding XBR/USD

Brent Crude is a commodity traded in barrels. The price of XBR/USD depicts the value of the US Dollar for 1 barrel of crude oil. It is quoted as 1 XBR per X USD. For example, if the market price of XBR/USD is 41.42, then it means that each barrel of crude oil is worth $41.42.

XBR/USD Specification

Spread

It is the basic difference between the bid price and the ask price. The spread on ECN and STP account model is as follows:

ECN: 11 | STP: 15

Fee

There is a fee (commission) for every position a trader opens. However, this fee is only on the ECN account, not the STP account.

Slippage

Slippage is the difference between the price intended by the trader and the price given by the broker. It occurs due to two factors:

  • Broker’s execution price
  • The volatility of the market

 Trading Range in XBR/USD

It is the representation of the volatility of the market in different time frames. The table values represent the minimum, average, and maximum pip movements in various time frames. 

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

XBR/USD Cost as a Percent of the Trading Range

The following are two tables that represent the variation in the fee in terms of a percentage for different time frames. The percentage values are calculated by finding the ratio between the total cost and the volatility values.

ECN Model Account

Spread = 11 | Slippage = 5 | Trading fee = 5

Total fee = Spread + Slippage + Trading fee

Total fee = 11 + 5 + 5 = 21 (pips)

STP Model Account

Spread = 15 | Slippage = 5 | Trading fee = 0

Total fee = Spread + Slippage + Trading fee

Total fee = 15 + 5 + 0 = 20 (pips)

Trading the XBR/USD

Crude oil is a commodity that is rigorously traded in the market. Its volatility and liquidity are comparable to major and minor currency pairs, providing good opportunities for traders to participate in the market. The crude oil prices are driven by various fundamental factors and its Demand and Supply. The reflection of the same is seen on the charts. Thus, traders can apply technical analysis as well to forecast the price movements.

There is a fee on every trade you take with a forex broker. This fee is the same irrespective of the time frame you trade on. So, traders must place themselves in a position that will have a reasonable cost for a sufficient P/L. The trading range and the cost percentage table are the tools for it.

The larger the percentage value, the higher is the relative fee on the trade and vice versa. For example, let’s there are two traders – 1D and 4H trading with the same lot size. The 1D trader places a take profit to 200 pips, while the 4H trader places it at 100 pips. But the fee paid by both the traders is the same. But, seeing the relative fee, the 4H trader pays a higher fee than the 1D trader because his take profit is only 100 pips. Thus, the percentage values are higher in the 1D time frame than the 4H time frame.

There is another scenario where the relative cost changes based on the volatility of the market. In simple terms, the relative fee can vary even if a trader trades in the same time frame. Precisely, the relative fee is higher when the volatility of the market is around the minimum values. Therefore, to balance between the total fee and the P/L, one must trade when the market volatility is above the average volatility, irrespective of the time frame traded.

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Forex Assets

Asset Analytics – Trading The CHF/HKD Foreign Exchange Pair

Introduction

CHF/HKD is the abbreviation for the Swiss Franc against the Hong Kong Dollar. It is categorized as an exotic currency pair that usually has high volatility and low trading volume. Here, the CHF (on the left) is the base currency, and the HKD (on the right) is the quote currency.

Understanding CHF/HKD

The market price of CHF/HKD represents the value of HKD that are obliged to purchase to one CHF. It is quoted as 1 CHF per X HKD. If at all the market price of this pair is 8.1718, then this amount of HKD is required to buy one CHF.  

 

Spread

The difference between the bid-ask price is described as the spread. Its value differs from the ECN account model and STP account model. The approximate value for the two is specified below:

ECN: 35 pips | STP: 40 pips

Fees

A fee is a price that one pays to the broker for executing a trade. There is no fee charged on STP accounts, but a few pips are charged on ECN accounts.

Slippage

The difference between price called for by the client and price that was offered by the broker is described as the slippage. Its value varies on the volatility of the market and the broker’s execution.

Trading Range in CHF/HKD

The trading range is that the tabular representation of the pip movement of a currency pair in several timeframes. These values are useful in determining the profit, which will be generated from trade in advance. To seek out the worth, you need to multiply the below volatility value with the pip value of this pair.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

CHFHKD Cost as a Percent of the Trading Range

By implementing the total cost to the mentioned table, we can ascertain the cost differences in a trade. The values are attained by finding a proportion between total cost and volatility value and are indicated as a percentage.

ECN Model Account

Spread = 35 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 35 + 8 = 48 

STP Model Account 

Spread = 40 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 40 + 0 = 45

The Ideal way to trade the CHF/HKD

Comprehending the above tables is important. The ratio to the total cost of trade is directly proportional to the value. It is seen that the rates are nearly high on the min section (less volatility) and the other way around. Now, the perfect chance to enter the market would be the point at which the volatility of CHF/HKD is somewhere between the average pip movement. Trading this pair during such minutes will guarantee low trading costs just as lower liquidity.

You can reduce the trading costs by placing orders using limit/pending orders instead of market orders. This will considerably reduce the total cost with slippage being zero. I hope this article will assist you in trading this pair in a much efficient way. Cheers!

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Forex Assets

Asset Analysis – Analyzing The XAG/USD Asset Class

Introduction

Silver is a precious metal standing after Gold. It is a vital asset to understand and forecast the potential movements in the commodity market. This is because buyers and sellers trade the silver market based on global macro trends. Moreover, Silver highly correlates with the Gold Spot prices. XAG/USD is the ticker for Silver against the US Dollar. XAG can be traded against other fiat currencies as well.

Understanding XAG/USD

Silver is a commodity that is traded in troy ounces (Oz), just like any other precious metal. The market price of XAG/USD represents the value of the US Dollar for 1 ounce (Oz) of Silver. It is quoted as 1 XAG per X USD. For example, if the market price of XAG/USD is 17.432, it signifies that each ounce of Gold is worth $17.432.

XAG/USD Specification

Spread

Spread is essentially the difference between the buying price and the selling price. The spread varies on the based account-model used.

ECN: 15 | STP: 21

Fee

A fee is basically the commission on the trade. It applies only to ECN accounts, not STP accounts.

Slippage

The arithmetic difference between the price asked by the trader and the price given by the Broker is referred to as slippage. It occurs due to two reasons: High market volatility & Broker’s execution speed

Trading Range in XAG/USD

The minimum, average, and maximum pip movement in different time frames is represented in the following table. It can be used to assess your risk on the trade.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

XAG/USD Cost as a Percent of the Trading Range

Cost a percent of the trading range is the representation of the variation in fees on the trade-in different time frames for varying volatility.

ECN Model Account

Spread = 15 | Slippage = 5 | Trading fee = 5

Total fee = Spread + Slippage + Trading fee

Total fee = 15 + 5 + 5 = 25 (pips)

STP Model Account

Spread = 21 | Slippage = 5 | Trading fee = 0

Total fee = Spread + Slippage + Trading fee

Total fee = 21 + 5 + 0 = 26 (pips)

Trading the XAG/USD

Silver Spot is extensively traded in the commodity market, after Gold Spot. It offers enough volatility and liquidity for traders to participate in the market. Silver highly correlates to Gold. Traders can use it as a proxy to place their bets on Silver prices. The technical analysis can be used on Silver as applied to any other market. Even though there is enough volatility in this pair, it is not ideal for entering any time into the market. The reason for it can be accounted for through the cost percentage table.

The cost percentage table represents how expensive a trade is going to be based on the time frame and volatility. Note that, the absolute total cost will remain the same irrespective of the two factors but will vary relatively. For instance, a 1H trader must pay the same fee a 4H trader pays for their trade. But, there a catch; the 4H trader generates more P/L than a 1H trader.

Thus, to have a balance between the P/L and fee on the trade, one must trade when the market volatility at or above the average values. Trading in low volatility markets will cause hurdles in the market to reach your target. Hence, we will have to pay the same costs, even for a small P/L.

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Forex Assets

Analyzing The ‘XAU/USD’ Financial Instrument & Determining The Trading Costs Involved

Introduction

Gold is a precious metal and one of the most valuable assets in the market. It is considered to be a safe haven instrument and a popular asset class for hedging positions during market uncertainty. XAU/USD is the abbreviation for the pair Gold Spot against the US Dollar. XAU is the ticker for Gold Spot. It can be traded against other fiat currencies like EUR and GBP as well.

Understanding XAU/USD

Gold Spot is an asset that is traded in troy ounces (Oz). The XAU/USD market price represents the value of the US Dollar for 1 ounce (Oz) of Gold. It is quoted as 1 XAU per X USD. For example, if the current market price of XAU/USD is 1730.50, it signifies that each ounce of Gold is worth the US $1730.5.

XAU/USD Specification

Spread

Spread is the difference between the bid price and the ask price. The spread usually varies based on the account type used for execution. The approximate spread on the gold spot on ECN account and STP account is as follows:

ECN: 100 | STP: 130

Fee

Typically, brokers do not charge any type of fee. But, on ECN accounts, there is some commission you must pay the broker for opening and closing a position. However, the fee is not significantly high.

Slippage

Due to the high market liquidity and slower broker’s execution speed, slippage occurs. It is the difference between the trader’s demanded price and the price at which the broker executed the trade. Slippage can occur both in favor and against the trader.

Trading Range in XAU/USD

The trading range is a tabular representation of the volatility in the market for several different time frames. It gives the minimum, average, and maximum volatility in the pair for different time frames.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

XAU/USD Cost as a Percent of the Trading Range

Cost as a percent of the trading range represents variation in the trade cost by considering the market’s time frame and volatility. Mathematically, it is the ratio of the volatility value and the total cost of the trade.

ECN Model Account

Spread = 100 | Slippage = 30 | Trading fee = 20

Total fee = Spread + Slippage + Trading fee

Total fee = 100 + 30 + 20 = 150 (pips)

STP Model Account

Spread = 130 | Slippage = 30 | Trading fee = 0

Total fee = Spread + Slippage + Trading fee

Total fee = 130 + 30 + 0 = 160 (pips)

The Ideal Timeframe to Trade XAU/USD

Gold is one of the oldest asset classes and one of the most reliable instruments as well. It is extensively traded in the market as most forex broker has XAU/USD available for trading. Its volatility and liquidity are no less than major currency pairs.

XAU/USD can be traded like any other foreign exchange pair. It, in fact, correlates with commodity currencies like AUD and NZD. Thus, traders use these two currencies in addition to USD, in order to analyze the pair. The same technical analysis applied to other markets can be used on the gold spot as well. However, the fundamentals do differ a little.

Coming to the costs, it technically remains the same for any time frame you trade. However, it relatively changes based on volatility and time frame. For example, a 1D trader who makes 2000 pips P/L on an average pays the same a 1H trader who makes 500 pips P/L on a trade. This is the reason the percentage values are higher in the 1H time frame than the 1D time frame.

Irrespective of the time frame you trade, you need to make sure that the market’s current volatility is above the average volatility. If you end trading when the volatility is at the minimum values, then you will have to pay the same costs for a trade that could not reach the target in your expected time.

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Forex Assets

Trading The ‘LINK/USD’ Crypto Fiat Pair & Analyzing The Costs Involved

Introduction

Chainlink is a decentralized oracle network whose purpose is to connect smart contracts with the real world. LINK is its native digital currency, which is used to node operators on the Chainlink decentralized oracle network. LINK has a market capitalization of $1.5 billion and stands 14th on CoinMarketCap. LINK can be bought using fiat currency as well as traded against other cryptocurrencies like BTC and ETH.

Understanding LINK/USD

The price of LINK/USD depicts the value of the US Dollar equivalent to one Chainlink. It is quoted as 1 LINK per X USD. For example, if the market price of LINK/USD is 4.36166, then each LINK will be worth so many dollars.

LINK/USD specifications

Spread

Spread is nothing but the arithmetic difference between the buying and selling price of the cryptocurrency. Unlike forex brokers, these prices are decided by the traders and not the exchange. Hence, the spread constantly varies in exchange as well as across exchanges.

Fee

Typically, there are three types of the fee charged by exchanges including

  • Execution fee (Taker or Maker) – twice, for opening and closing the trade
  • 30-day trading volume fee
  • Margin opening fee, if applicable

Example

  • Long 1,000 LINK/USD at $4.45509
  • 30-day volume fee is $0
  • Order is executed as Taker
  • With Leverage

Total cost of the order = 1,000 x $4.45509 = $4455.09

Assuming the taker fee to be 0.26%, the opening fee will be – $4455.09 x 0.26% = $11.58

The margin opening fee of 0.02% is charged for opening the position using leverage – $4455.09 x 0.02% = $0.89

If the order is closed at $4.50000, the total cost of closing will be – 1,000 x $4.50000 = $4500.00. And the fee for closing will turn to be – $4500.00 x 0.26% = $11.70

Thus, the total fee will be the sum of all the fees – $11.58 + $0.89 + $11.70 = $24.17

Trading Range in LINK/USD

Chainlink is traded in cryptocurrency exchanges and not forex brokers. So, there is no concept of pip and pip value. Instead, the value of the crypto is directly taken into account.

A trading range is the tabular representation of the approximate value movement of the pair, which is obtained through the Average True Range (ATR) indicator. In layman terms, the numbers in the table depict the amount of US dollars a trader will gain or lose in a given time frame. The following table shows the value of the price movement for 1,000 quantities LINK/USD.

Note: the above values are for trading 1,000 units of LINK/USD. If X units of the pair are traded, then the ATR values will be,

(ATR value from the table / 1,000) x X units

Procedure to assess ATR values

  1. Add the ATR indicator to your chart.
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator.
  4. Shrink the chart so you can assess an extensive period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

LINK/USD Cost as a Percent of the Trading Range

Below are two tables representing cost variations for different time frames in terms of a percentage for taker execution and maker execution.

Taker Execution Model

Opening = $11.58 | Margin fee = $0.89 | Closing = $11.70 | 30-day volume = $0

Total fee = Opening + Margin fee + Closing + 30-day volume = $11.58 + $0.89 + $11.70 + $0 = $24.17

Maker Execution Model

Opening = $7.12 | Margin fee = $0.89 | Closing = $7.2 | 30-day volume = $0

Total fee = Opening + Margin fee + Closing + 30-day volume = $7.12 + $0.89 + $7.2 + $0 = $15.21

*Assuming maker fee to be 0.16% the trade value.

Interpretation of Cost as a Percent of the Trading Range

Let us directly understand the table with an example.

1H time frame

ATR value = 41.92

Cost percentage = 57.66%

4H time frame

ATR value = 92.32

Cost percentage = 26.18%

Comparing ATR values, we infer that more profit can be generated in the 4H time frame ($92.32) than in the 1H time frame ($41.92). But, a critical point to note is that the cost is the same for both the trades. A fee that is paid to gain $92.32, the equal fee must be paid to gain $41.92. This difference is represented using the cost percentage. Thus, the percentage in the 1H time frame is higher than that in the 4H time frame, indicating that the relative costs are higher.

Trading the LINK/USD

LINK can be traded against USD and few cryptocurrencies as well. However, LINK/USD is seen to have the highest trading volume. Comparing the liquidity with other cryptocurrency pairs like BTC/USD, ETH/USD, and XRP/USD, LINK/USD is less liquid.

From the above comprehension of the cost percentage, we understood that the costs remain the same irrespective of the time frame you trade. Thus, to relatively reduce the costs, we must focus on the columns of the table. The effective way to trade this pair is to enter the market when the volatility is at or above the average values. For example, if you are a day trader who trades the 1H time frame, you must make sure that the volatility is above the average level. In doing so, you will be able to extract more from the market for the same total fee. Cheers!

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Forex Assets

Analyzing The ‘XMR/USD’ Crypto Fiat Pair

Introduction

Monero is a private and secure cryptocurrency that was launched 18th of April 2014 as a fork of ByteCoin. It is an open-source digital currency built on a blockchain, making it opaque. With Monero, the holder will have full control over their investment and funds, and nobody will have access to their balance and transactions.

Monero is traded in exchanges under the ticker XMR. It is under the top 20 in terms of market capitalization according to data from CoinMarketCap. It can be traded against USD as well as for cryptocurrencies Bitcoin, Ethereum, Tether, etc.

Understanding XMR/USD

The price of XMR/USD depicts the value of the US Dollar equivalent to one Monero. It is quoted as 1 XMR per X USD. For example, if the market price of XMR/USD is 64.67, then each XMR will be worth about 65 dollars.

XMR/USD specifications

Spread

Spread is the basic difference between the bid and the ask price of the cryptocurrency. These prices are put up by the clients and not exchange. Thus, the spread constantly varies in and across exchanges.

Fee

The types of fees in cryptocurrency exchanges vary from that of equity broker and forex brokers. Most crypto exchanges charge the following fees:

  • Execution fee (Taker or Maker) – twice, for opening and closing the trade
  • 30-day trading volume fee
  • Margin opening fee, if applicable

Example

  • Short 100 XMR/USD at $64.82
  • 30-day volume fee is $0
  • Order is executed as Taker
  • With Leverage

Total cost of the order = 100 x $64.82 = $6482

Assuming the taker fee to be 0.26%, the opening fee will be – $6482 x 0.26% = $16.85

Since the trade is opened with leverage, there is 0.02% of margin opening fee collected – $6482 x 0.02% = $1.29

If the position is squared off at $60.00, the total cost of closing will be – 100 x $60.00 = $6000.  The fee for the same can be calculated as – $6000 x 0.26% = $15.60

The algebraic sum of all the fee will yield the total fee as –

$16.85 + $1.29 + $15.60 = $33.74

Trading Range in XMR/USD

A trading range is the number of units the cryptocurrency pair moves in a specific time frame, represented in US dollars as the quote currency for the pair is USD. The values basically depict the volatility in different time frames.

The following table is the trading range for 100 quantities of XMR/USD.

Note: the above values are for trading 100 units of XMR/USD. If X units of the pair are traded, then the ATR values will be,

(ATR value from the table / 1,000) x X units

Procedure to assess ATR values

  1. Add the ATR indicator to your chart.
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator.
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

XMR/USD Cost as a Percent of the Trading Range

This cost as a percent represents relative the fee on the trade by considering the volatility and time frames. The percentage values are calculated by finding the ratio of each ATR value and the total fee.

Taker Execution Model

Opening = $16.85 | Margin fee = $1.29 | Closing = $15.60 | 30-day volume = $0

Total fee = Opening + Margin fee + Closing + 30-day volume = $16.85 + $1.29 + $15.60 = $33.74

Maker Execution Model

Opening = $10.37 | Margin fee = $1.29 | Closing = $9.6 | 30-day volume = $0

Total fee = Opening + Margin fee + Closing + 30-day volume = $10.37 + $1.29 + $9.6 + $0 = $21.26

*Assuming maker fee to be 0.16% the trade value.

Trading the XMR/USD

XMR is ranked 16 in market capitalization with a denominator over a thousand. It offers enough liquidity and volume for retail traders to participate in this pair. However, it is comparatively lesser than coins like Bitcoin, Ethereum, Ripple, Bitcoin Cash, etc.

As far as the analysis for this pair is concerned, it is no different from analyzing other cryptocurrencies and forex pairs. Hence, you can confidently apply those concepts in Monero as well.

The cost percentages in the above tables represent how expensive or cheap trade is going to be based on the profit you make or the loss you incur. The larger the percentage, the higher is the fee. Note that we are referring to the relative fee, not the absolute fee. Irrespective of the time frame and volatility, the fee will be the same but will vary relatively. For example, a short-term trader who makes $50 on trade must pay the same fee as a long-term trader who makes $1000.

Thus, to effectively reduce your relative costs, you must understand the volatility of the market. The concept is simple; one can make money only if there is enough movement in the market. Thus, before taking a trade, you must know the current volatility of the market using the ATR indicator. If the values are above the average, then you’re good to go. But, values near the minimum value indicates that there is not much movement in the market, and it could not reach your target point within the expected time.

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Forex Assets

XTZ/USD – Trading Costs Involved While Trading This Crypto-Fiat Pair

Introduction

Tezos is a platform that supports the development of DApps and smart contracts. It was created by an ex-Morgan Stanley analyst Arthur Breitman who launched an Initial Coin Offering (ICO) in 2017, raising $232 million. The next year, Tezos launched its beta network in July.

Tezos works by giving incentives to users willing to participate in the development of its protocol. Note that the complete network is decentralized. Users cannot mine Tezos coins as it based on the Proof-of-stake mechanism, unlike the Proof-of-Work in Bitcoin blockchain. Tezos is powered with its own XTZ token, which is created through a process called “baking.”

Understanding XTZ/USD

The price of XTZ/USD depicts the value of the US Dollar equivalent to on Tezos. It is quoted as 1 XTZ per X USD. For example, if the XTZ/USD’s market price is 2.9157, then each XTZ will be worth 2.9157 US dollars.

XTZ/USD specifications

XTZ stands 11th in terms of market capitalization on CoinMarketCap. Forex brokers typically allow trading of only the top 3 or top 5 for trading. So, most brokers do have XTZ enabled for trading. Thus, you will have to approach a cryptocurrency broker instead. They work quite differently from that of the forex broker. For example, instruments are traded in lots with forex brokers, unlike cryptocurrency exchanges.

Spread

Spread is the difference between the buying and selling price of the cryptocurrency. These prices are set by individual traders and not the exchange.  Thus, the spread always varies. Hence, we shall not be considering the spread in further calculations.

Fee

There are a number of fees charged by exchanges for trading cryptos. Below are some types of fees levied by most exchanges.

  • Execution fee (Taker or Maker)
  • 30-day trading volume fee
  • Margin opening fee, if applicable

Note that, the taker or maker fee is charged twice – for opening and closing the trade.

Example

  • Long 1,000 XTZ/USD at $2.9169
  • 30-day volume fee is 0.12%
  • Order is executed as Maker
  • Without Leverage

Total cost of the order = 1,000 x $2.9169 = $2916.9

Assuming the maker fee to be 0.16%, the opening fee will be – $2916.9 x 0.16% = $4.66

In addition, there is 0.12% fee for 30-day volume fee – $2916.9 x 0.12% = $3.50

Since the trade is opened without leverage, the margin opening fee will be $0.

If the order is closed at $2.9605, the total cost of closing will be – 1,000 x $2.9605 = $2960.5. The fee for closing will be:

$2960.5 x 0.16% = $4.73

Therefore, the total fee for this trade can be calculated as:

$4.66 + $3.50 + $4.73 = $12.89

Trading Range in XTZ/USD

The trading range in cryptocurrencies is different from that of foreign exchange. In forex, we calculated the pip movement using the ATR indicator and multiplied it with the pip value to find its worth. Since in cryptocurrency exchanges, there is no concept of pips. So, instead of representing the pip movement, we directly represent the value/worth of the price movement into the table.

The below table represents the value of the price movement for 1,000 quantities of XTZ/USD.

Note: the above values are for trading 1,000 units of XTZ/USD. If X units of the pair are traded, then the ATR values will be,

(ATR value from the table / 1,000) x X units

Procedure to assess ATR values

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

XTZ/USD Cost as a Percent of the Trading Range

Cost as a percent of the trading range represents the relative cost in terms of percentage. It is calculated by finding the ratio between the total cost and the ATR value. The comprehension of it shall be discussed in the subsequent topic.

Taker Execution Model

Opening = $7.58 | Margin fee = $0 | Closing = $7.69 | 30-day volume = $3.50

Total fee = Opening + Margin fee + Closing + 30-day volume = $7.58 + $0 + $7.69 + $3.50 = $18.77

*Assuming taker fee to be 0.26% the trade value.

Maker Execution Model

Opening = $4.66 | Margin fee = $0 | Closing = $4.73 | 30-day volume = $3.50

Total fee = Opening + Margin fee + Closing + 30-day volume = $4.66 + $0 + $4.73 + $3.50 = $12.89

Interpretation of Cost as a Percent of the Trading Range

Firstly, the trading range table, in simple terms, depicts the approximate dollar profit/loss on the trade. For instance, let us consider the average value on the 4H timeframe, which is 71.5. This means that one can gain or lose an average of $71.5 in a matter of 4 hours or so.

With respect to the percentage table, the value of the percentage signifies how expensive the costs are relative to the time frame and profit or loss generated. In other sense, the cost remains the same irrespective of the time frame you trade. For example, let us consider the average percentage on the 4H time frame, which is 18.03%, and the average on the 1H, which is 34.01%. In both cases, the overall is the same, but the cost relative to the profit made, the cost appears to be higher in the 1H time frame because the profit amount is lower than the 4H time frame because there is more price movement on the 4H time frame.

Trading the XTZ/USD

Tezos is under the top 15 in market capitalization according to the data from CoinMarketCap. This signifies that it is intensively traded in the market. Most of the buying and selling happens in the cryptocurrency exchanges.

There are two types of traders – short term and long term. A short term trader may trade the 1H, 2H, 4H, or the 1D time frame, while a long term trader may go with the 1W or 1M time frame. Also, irrespective of the time frame, one must trade when the market volatility is around the average, or maximum value to relatively reduce fees on the trade.

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Forex Assets

Analyzing The ‘ADA/USD’ Crypto-Fiat Asset Class

Introduction

Cardano is a decentralized platform allowing programmable transfers of value securely in a scalable fashion. It is the first blockchain created out from a scientific philosophy. It is also the first research-driven cryptocurrency that is built on the Haskell programming language.

Cardano is traded with the ticker ADA. It has a market capitalization of $2.2 billion. It can be bought, sold, and exchanged in several cryptocurrency exchanges. Apart from USD, it can be traded against other cryptos such as BTC, ETH, USDT, etc.

Understanding ADA/USD

The price of ADA/USD depicts the value of the US Dollar equivalent to one Cardano. It is quoted as 1 ADA per X USD. For example, if the market price of ADA/USD is 0.086112, then each ADA will be worth 0.086112 US dollars.

ADA/USD specifications

Forex brokers allow trading of only a few popular cryptocurrencies like Bitcoin, Ethereum, Ripple, etc. The other cryptos must be traded via cryptocurrency exchanges. And the working of these exchanges is different from that of forex brokers. As a major difference, cryptos are not traded in lots, in cryptocurrency exchanges.

Spread

Spread is the difference between the buying and selling price of the cryptocurrency. Crypto exchanges match these prices between induvial traders. Thus, there is no fixed spread. Also, typically, the spread is negligible in trading cryptos.

Fee

There are different fees charged by cryptocurrency exchanges for trading any coin. The various forms of fees include

  • Execution fee (Taker or Maker)
  • 30-day trading volume fee
  • Margin opening fee, if applicable

Note that the taker or maker fee will be considered for opening as well as closing the trade, and will depend on the value being traded.

Example

  • Short 10,000 ADA/USD at $0.085800
  • 30-day volume fee is $0
  • Order is executed as Taker

Total cost of the order = 10000 x $0.085800 = $858

Assuming the taker fee to be 0.26%, the opening fee will be – $858 x 0.26% = $2.23

Assuming the trade is opened with leverage, and the margin opening fee is 0.02%, the fee is calculated as – $858 x 0.02% = $0.17

If the order is closed at $0.095800, the total cost of closing will be 10,000 x $0.095800 = $958. And the fee for the same obtained is – $958 x 0.26% = $2.5

Thus, the total fee for the opening, maintaining and closing the trade would be equal to – $2.24 + $0.17 + $2.5 = $4.91

Trading Range in ADA/USD

The trading range represents the number of units moved in the pair in a specified time frame. For example, if 10,000 ADA/USD is traded and the average unit movement in the 1H time frame is 0.000778, then it means the pair will yield 10,000 x 0.000778 = $7.78.

Note: the above values are for trading 10,000 units of ADA/USD. If X units are traded, then the ATR values will be,

(Above ATR value / 10,000) x X units

Procedure to assess ATR values

  1. Add the ATR indicator to your chart.
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator.
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

ADA/USD Cost as a Percent of the Trading Range

The following tables depict the variations in total cost in terms of percentage based on the change in volatility and time frame.

Taker Execution Model

Opening = $2.23 | Margin fee = $0.17 | Closing = $2.5

Total fee = Opening + Margin fee + Closing = $2.24 + $0.17 + $2.5 = $4.91

Maker Execution Model

Opening = $1.37* | Margin fee = $0.17 | Closing = $1.53*

Total fee = Opening + Margin fee + Closing = $1.37 + $0.17 + $1.53 = $3.07

*Assuming maker fee to be 0.16% the trade value.

Trading the ADA/USD

Cardano stands 10th in CoinMarketCap in terms of market capitalization. Thus, making it a tradable pair in the crypto market. Almost all forex brokers do not ADA enabled for trading, so it must be traded through cryptocurrency exchanges. The fee structure here is quite different from forex brokers. However, the overall fee is more or less the same.

Comprehending the above tables, the magnitude of the percentage depicts how expensive/cheap a trade will be relative to the time frame and profit/loss. Let us understand this with an example.

The average values in 4H and 1D are 26.65% and 9.73%, respectively. The percentage in the 4H time frame is greater than the percentage in the 1D time frame. This means that the total cost for both is the same ($4.91), but relative to the generated profit, it is higher in the 4H time frame. A detailed reason for this can be given from the trading range table.

In the trading range table, the corresponding values are $11.52 and $31.55. This can be interpreted as, an average of $11.52 will be generated in trading the 4H time frame, and $31.55 when trading the 1D time frame. The fee in both cases is the same. Thus, we infer that the fee that is paid to generate $31.55, the same fee is deducted for generating $11.52. And hence, this is exactly what the higher percentage value depicts.

Reading through the row, the percentage values for a time frame is highest in the minimum column and least in the maximum column. So, if you’re are able to deal with higher volatility, it is ideal to trade when the volatility is around the average or maximum values. And if you cannot deal with the high volatility, you may trade the higher time frames to reduce the relative costs.

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Forex Assets

AUD/HRK – Analyzing The Costs Involved While Trading This Exotic Pair

Introduction

The abbreviation of AUD/HRK is Australian Dollar, paired with the Croatian Kuna. Here AUD is the official currency of Australia and is also the fifth most traded currency in the Foreign Exchange market. In contrast, HRK stands for the Kuna, and it is the official currency of Croatia. The Croatian National Bank issues this currency.

Understanding AUD/HRK

In the Forex market, to determine the relative value of one currency, we need another currency to compare. Here, when we buy a currency, which is known as the base currency and simultaneously sell the quote currency. The market value of AUD/HRK helps us to understand the strength of HRK against the AUD. So if the exchange rate for the pair AUD/HRK is 4.5571, it means to buy 1 AUD, we need 4.5571 HRK.

Spread

A spread is defined as the difference between the purchasing & selling price of a Forex pair. In simple words, it is the difference between the bid price and the ask price of an asset. Below is the spread charges for ECN and STP brokers for AUD/HRK pair.

ECN: 40 pips | STP: 43 pips

Fees

A Fee is the charges that we traders pay to the broker for executing a trade. Fees to a much depend on the type of broker(STP/ECN) we use.

Slippage

When we want to execute a trade at a particular market rate, but instead, the trade gets executed at a different rate, and that is because of the slippage. Slippage occurs when we counter a volatile market, and when we execute a large order at the same time.

Trading Range in AUD/HRK

The trading range here will determine the amount of money we will win or lose in a given amount of time. In the below table, we have the representation of the minimum, average, and maximum pip movement in a currency pair. Here we will use the ATR indicator that indicates the price movement in a currency pair. We will evaluate it merely by using it with 200-period SMA.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

AUD/HRK Cost as a Percent of the Trading Range

The cost of trade depends on the broker type and varies based on the volatility of the market. The overall cost of trade includes spread, fees, and sometimes slippage if the volatility is more. To decrease the cost of the trade, we can use limit orders instead of market execution.

ECN Model Account

Spread = 40 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 40 + 5 = 48

STP Model Account

Spread = 43| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 43 + 0 = 46

Trading the AUD/HRK

AUD/HRK is an exotic currency pair. As we can see, the average pip movement in 1hr is 133, which implies higher volatility. The higher the volatility, the higher is the risk and lower is the cost of the trade and vice versa. Taking an example, we can see from the trading range that when the pip movement is lower, the charge is high, and when the pip movement is high, the charge is low.

To reduce our costs of trade, we may place trades using limit orders instead of market orders. In the below table, we will see the representation of the cost percentages when limit orders are used. As we can see, the cost of slippage is zero. In doing so, the slippage will not be included in the calculation of the total costs. And this will help us in reducing the trading cost by a considerable margin. An example of the same is given below.

ECN Model Account (Using Limit Orders)

Spread = 40 | Slippage = 0 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 0 + 40 + 5 = 45

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Forex Assets

AUD/RON – What Should You Know Before Trading This Exotic Pair?

Introduction

The abbreviation of AUD/RON is Australian Dollar paired with Romanian Leu. Here AUD is the official currency of Australia and is also to be the fifth most traded currency in the Forex market. While RON stands for The Romanian leu, and it is the currency of Romania.

Understanding AUD/RON

In AUD/RON currency pairs, the first currency (AUD) is the base currency, and the second currency (RON) is the quote currency. In the Foreign Exchange market, we always buy the base currency and simultaneously sell the quote currency and vice versa. Here, the market value of AUD/RON helps us to understand the strength of RON against the AUD. So if the exchange rate of the pair AUD/RON is 2.9141, it means to buy1 AUD we need 2.9141 RON.

Spread

Forex brokers charge some commission on the trade we open, and that depends on the ask and the bid price by the broker. Spread is the difference between this Ask and Bid price. Every broker has different ask and bid prices. Below is the spread charges for ECN and STP brokers for AUD/RON pair.

ECN: 33 pips | STP: 35 pips

Fees

A Fee is the charges that we traders pay to the broker for opening a trade. This fee depends on the type of broker we use (STP/ECN).

Slippage

When we want to execute a trade at a particular market rate, but instead, the trade gets executed at a different rate. This is because of slippage. Slippage can take place at any time, but mostly we can counter a volatile market, and when we execute a large order at the same time.

Trading Range in AUD/RON

As a trader, our main motive should be to know the market volatility and avoid losses. The trading range here will determine the amount of money we will win or lose in a given amount of time. ATR is a technical indicator that indicates the price movement in a currency pair. In the below table, we have the representation of the minimum, average, and maximum pip movement in a currency pair. We will evaluate it merely by using the ATR indicator combined with 200-period SMA.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can determine a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

AUD/RON Cost as a Percent of the Trading Range

The cost of trade depends on the broker type and varies based on the volatility of the market. The overall cost of trade includes spread, fees, and sometimes slippage if the volatility is more. To decrease the cost of the trade, we can use limit orders instead of market execution.

ECN Model Account

Spread = 33 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 33 + 5 = 41

STP Model Account

Spread = 35| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 35 + 0 = 38

Trading the AUD/RON

AUD/RON is an exotic currency pair. As we can see, the average pip movement in 1hr is 127, which shows the volatility is very high. Note, the higher the volatility, the higher is the risk and lower is the cost of the trade and vice versa.

Taking an example, we can see from the trading range that when the pip movement is lower, the charge is high, and when the pip movement is high, the charge is low. AUD/RON must be traded with proper risk management because of its volatile nature. If we have our strategy with adequate risk management, we can trade in a volatile market too.

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Forex Assets

Trading The AUD/DKK Forex Pair & Analyzing The Trading Costs Involved

Introduction

The abbreviation of AUD/DKK is the Australian Dollar paired with the Danish Krone. Here, AUD is the official currency of Australia and many others like Christmas Island and Norfolk Island. AUD is also to be the fifth most traded currency in the Forex market. In contrast, DKK stands for the Danish Krone, and it is the currency of Denmark, Greenland, and the Faroe Islands.

Understanding AUD/DKK

In AUD/DKK currency pairs, the first currency(AUD) is the base currency, and the second currency(DKK) is the quote currency. In the foreign exchange market, when we sell a currency pair, we always sell the base currency and simultaneously buy the quote currency and vice versa. Here, the market value of AUD/DKK helps us to understand the strength of DKK against the AUD. So if the exchange rate for the pair AUD/DKK is 4.4625, it means we need 4.4625 DKK to buy 1 AUD.

Spread

Forex brokers have two prices for currency pairs: the bid and ask price. The bid price is the price in which we sell an asset, and ask is the price at which we buy it. The difference between the ask and the bid price is called the spread. Below are the spread values for the AUD/DKK Forex pair.

ECN: 20 pips | STP: 23 pips

Fees

A Fee is the charges that we traders pay to the broker for opening a trade. This fee depends on the type of broker (STP/ECN) we use.

Slippage

When we want to execute a trade at a particular price, but instead, if the trade gets executed at a different price, we call that difference as Slippage. The Slippage can take place at any time, but mostly we can counter a volatile market.

Trading Range in AUD/DKK

As a trader, our main motive should be to avoid losses and risks. The trading range here will determine the amount of money we will win or lose in a given amount of time. ATR is a technical indicator that indicates the price movement in a currency pair. In the below table, we have the representation of the minimum, average, and maximum pip movement in a currency pair. We will evaluate it merely by using the ATR indicator combined with 200-period SMA.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

AUD/DKK Cost as a Percent of the Trading Range

The cost of trade depends on the broker type and varies based on the volatility of the market. The total cost of trade involves spread, fees, and sometimes Slippage if the volatility is more.

ECN Model Account

Spread = 20 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 20 + 5 = 28 

STP Model Account

Spread = 23| Slippage = 3 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee = 23 + 3 + 0 = 26

Trading the AUD/DKK

AUD/DKK is an exotic currency pair that less traded in the forex exchange market. The average pip movement in 1hr is 183, which shows the volatility is very high.

Note, The higher the volatility, the higher is the risk and lower is the cost of the trade and vice versa. Taking an example, we can see from the trading range when the pip movement is more, the cost is low, and when the pip movement is low, the cost is high.

Trading using LIMIT ORDERS

To reduce our costs of trade, we can place the trades using limit orders instead of market orders. In doing so, we can eliminate the Slippage that will help reduce the overall cost of the trade. An example of a Limit order is given below.

Spread = 20 | Slippage = 0 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 0 + 20 + 5 = 25

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Forex Assets

Costs Involved While Trading The ‘AUD/PLN’ Exotic Pair

Introduction

The expansion of AUD/PLN is the Australian Dollar and Polish Zloty. Here, AUD is the official currency of Australia, and it is the fifth most traded currency in the Forex market. Hence, it is considered as a major currency. In contrast, the PLN (Polish złoty) is thinly traded, and it is the official currency of Poland.

Understanding AUD/PLN

In AUD/PLN currency pairs, the first currency (AUD) is considered the base currency, and the second (PLN) is considered the quote currency. In the foreign exchange market, we always buy the base currency and simultaneously sell the quote currency and vice versa. The market value of AUD/PLN helps us to understand the strength of PLN against the AUD. If the exchange rate of AUD/PLN is 2.7427, it means that we need 2.7427 PLN to buy 1 AUD.

Spread

In Forex, spreads are inevitable, and it is mainly controlled by the broker. Forex brokers have two prices for currency pairs: the bid and ask price. The bid is the price at which we sell an asset, and ask is the price at which we buy it. The difference between the ask price and the bid price is called the spread. Below are the ECN & STP spread values for AUD/PLN Forex pair.

ECN: 17 pips | STP: 20 pips

Fees & Slippage

A fee in Forex is the charges we pay to the broker for opening a trade. Mostly, these fees depend on the type of broker (STP/ECN) we use.

There are times when we want to execute a trade at a particular price, but instead, we end up executing it at a different price. This happens because of slippage. Slippage can take place at any time, but mostly it occurs, we can counter a volatile market.

Trading Range in AUD/PLN

As a trader, we must be aware of the risks involved before entering any trade. The trading range here will guide us about the amount of money we will win or lose in a given amount of time. In the below table, we have the representation of the minimum, average, and maximum pip movement in a currency pair. We will evaluate it by using the ATR indicator combined with 200-period SMA.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

AUD/PLN Cost as a Percent of the Trading Range

The cost of trade depends on the broker type and varies based on the volatility of the market. The total cost of trade involves spread, fees, and sometimes slippage if the volatility is more.

ECN Model Account

Spread = 17 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 17 + 5 = 25

STP Model Account

Spread = 20| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 20 + 0 = 23

Trading the AUD/PLN

AUD/PLN is an exotic currency pair that is rarely traded in the Forex exchange market. The average pip movement in 1hr is 63 pips, and that shows the volatility is at medium range.

Note – The higher the volatility, the higher is the risk, and the lower is the cost of the trade and vice versa. Taking an example, we can see from the trading range when the pip movement is more, the cost is low, and when the pip movement is low, the cost is high.

To reduce our trading costs, we may place trades using limit orders instead of market orders. In doing so, the slippage will not be included in the calculation of the total costs. This greatly helps us in reducing the overall cost of the trade. An example of the same is given below. In the below table, we can see how the trading costs have reduced comparatively.

ECN Model Account (But by using Limit Orders)

Spread = 17 | Slippage = 0 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 0 + 17 + 5 = 22

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Forex Assets

Everything About Trading The ‘AUD/NOK’ Forex Exotic Pair

Introduction

The abbreviation of AUD/NOK is the Australian Dollar and the Norwegian Krone. AUD is the official currency of Australia and many others like Christmas Island, Cocos Islands, and Norfolk Island. This currency is also proven to be the fifth most traded currency in the Forex market right after USD, EURO, JPY, and GBP. Whereas the NOK stands for Norwegian Krone, and it is the official currency of Norway and its dependent territories.

Understanding AUD/NOK

In the Forex, Currency pairs are the national currencies from two countries coupled for being exchanged in reference to each other. The first currency here is the base currency, and the second currency is the quote currency. Here, the market value of AUD/NOK helps us to understand the strength of NOK against the AUD. So if the value for the pair AUD/NOK is 6.5921, it means we need 6.5921 NOK to buy 1 AUD.

Spread

All Forex brokers have two different prices for currency pairs: selling price and buying price, and they are known as bid and ask price. Spread is the difference between the selling price and the buying price. Below is the spread for ECN and STP brokers for the AUD/NOK pair.

ECN: 50 pips | STP: 53 pips

Fees & Slippage

A Fee in Forex is the commission we need to pay to the broker for executing a particular position. If we subtract the trader’s expected price with the actual price at which the trade is executed, we get the Slippage. It occurs when the volatility of the currency pair is high. It may also occur when a large number of orders are placed at the same time.

Trading Range in AUD/NOK

Volatility is a basic measure of risk every trader should be well aware of before entering the market. Whether we have a profit or loss in a given time period relies on the pip movement of that currency pair. This can be assessed using the trading range table. The trading range here represents the minimum, average, and maximum movement of the pip in AUD/NOK.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

AUD/NOK Cost as a Percent of the Trading Range

We must be aware of the over cost we will pay to trade a currency pair. The cost of trading a currency pair depends mostly on the volatility and also the broker, which we use. The overall cost here involves spread, slippage, and the trading fee. Below we will see the calculation of the cost variation in terms of percentages.

ECN Model Account

Spread = 50 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 50 + 5 = 58

STP Model Account

Spread = 53 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 53 + 0 = 56

Trading the AUD/NOK

We are much aware of major and minor currency pairs, but there are few currencies that are less traded in the foreign exchange market. These currencies are called exotic-cross currency pairs. AUD/NOK is one such exotic pairs. As we see in the trading range chart, the average pip movement of AUD/NOK is 205, and by this, we can conclude that AUD/NOK is a volatile market.

To have a better understanding of the volatility, we will try to understand this with the help of an example. In the 1H time frame, the average pip movement is 205, and the cost percentage is 28.29%. Where in the minimum pip movement in 1hr is 81 and trading, it will cost us 71.60%.

This shows us that higher the volatility lesser is the cost of a trade. But trading in a volatile market involves risk as the movement of the pips is very fast. However, we can trade a volatile market if we follow proper money management rules.

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Forex Assets

What Should You Know About The ‘XLM/USD’ Crypto Fiat Pair

Introduction

XLM is the abbreviation for Stellar. This cryptocurrency was founded in 2014 by Jed McCaleb. Stellar is also a payment technology that was created mainly to connect financial institutions and reduce the costs for cross-border transfers.

Stellar is actively traded in the market against fiat currencies and other cryptocurrencies. In this article, we shall be analyzing Stellar against the US dollar, abbreviated as XLM/USD.

Understanding XLM/USD

The price of XLM/USD depicts the value of the US Dollar that is equivalent to one Stellar. It is quoted as 1 XLM per X USD. For example, if the value of XLM/USD is 0.073264, then each stellar is worth 0.073264 US dollars.

Note: The price is considered from coinbase exchange.

XLM/USD Specifications

Spread

It is the athematic difference between the bid and the ask price managed by exchanges. It varies based on the type of execution model used by exchanges.

Spread on ECN: 450 pips

Spread on STP: 520 pips

Fee

A Fee is nothing but the commission on the trade. It is charged only on ECN accounts, and there is no fee on STP accounts.

Slippage

The difference between the trader’s intended price and the broker’s executed price is called slippage. It varies based on the volatility of the market and the exchange’s execution speed.

Trading Range in XLM/USD

The trading range is simply the illustration of the pip movement in a pair for different timeframes. With these values, a trader will know how long they have to wait for their trade to perform. Also, they can calculate approximate profit/loss on a trade beforehand.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

XLM/USD Cost as a Percent of the Trading Range

The following tables represent the total cost variations for ECN and STP accounts. It represents how the costs vary with the change in volatility.

ECN Model Account

Spread = 450 | Slippage = 70 |Trading fee = 50

Total cost = Slippage + Spread + Trading Fee = 70 + 450 + 50 = 570

STP Model Account

Spread = 520 | Slippage = 70 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 70 + 520 + 0 = 590

Trading the XLM/USD

It is a known fact that cryptocurrency is a 24-hour market and is traded even during the weekend. However, this does not mean we can enter any time to pull out a trade from it. Though many traders do this, it is not a professional approach. Using the volatility and cost variation values, we can determine the ideal times to trade this pair.

The pip values seem to look really large, but it doesn’t indicate high volatility. This pair is as volatile as other major cryptocurrencies. From the cost table, it can be ascertained that the values are large for lower volatilities that decease as the volatility increases. So, traders who are concerned with high costs can trade during the times when the volatility high. However, they must be cautious about the risk involved in it. On the other hand, traders who wish to have an equilibrium between the two, then they may trade when the volatility is around the average values.

Furthermore, trading via limit and stop orders also reduces costs by a good number. In doing so, the slippage will be taken off of the total costs. So, in our example, the total cost would reduce by 70, which is quite a decent reduction.

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Forex Assets

Trading The ‘GBP/BRL’ Exotic Pair & Comprehending The Costs Involved

Introduction

GBP/BRL is the abbreviation for the Pound sterling against the Brazilian real. As we know, GBP is the official currency of the United Kingdom, Jersey, Guernsey, and others, whereas BRL is the official currency of Brazil. In Forex trading, currencies are always traded in pairs. The primary currency in the pair is known as the base currency, while the second one is the quote currency.

Understanding GBP/BRL

To find the relative value of one currency, we compare that with another currency in the Forex market. The market value of GBP/BRL helps us to understand the strength of BRL against the GBP. If the exchange rate of the pair GBP/BRL is 6.5415. It means that to buy 1 GBP, we need 6.5415 BRL.

Spread

Forex brokers have two prices for currency pairs. They are the bid and ask prices. The difference between this bid and the ask prices is known as the spread, and this is how Forex brokers profit for the services they provide. Some brokers include the costs in the buy and sell prices of the currency pairs instead of charging spreads. Below are the ECN and STP spread values for the pair GBP/BRL.

ECN: 41 pips | STP: 44 pips

Fees

A Fee is a commission we pay to the broker for executing our trades. It differs for different types of brokers. For instance, there is no fee charged by the STP brokers, but for ECN accounts, a few pips are charged a fee.

Slippage

It is the difference between the expected price and the price at which the trade gets executed. Slippage can occur at any time, but it mostly happens when the market is highly volatile.

Trading Range in GBP/BRL

Being aware of the volatility of a particular currency pair before placing the trade is very important for every aspiring trader. The trading range here is useful to measure the volatility of the GBP/BRL pair. The amount of money we will win or lose in a given amount of time can be assessed using the below trading range table.

Procedure to assess Pip Ranges

  1. Add the Average True Range indicator on your price chart
  2. Then, set the period to one
  3. Add a 200-period Simple Moving Average to the ATR indicator
  4. Shrink the chart to assess a significant period
  5. Select the desired timeframe
  6. Measure the floor level and set this value as the minimum
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

GBP/BRL Cost as a Percent of the Trading Range

The cost of trade depends on the broker type and varies based on market volatility. The total cost of trade involves spreads and slippage apart from the trading fee.

ECN Model Account

Spread = 41 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 41 + 5 = 49

STP Model Account

Spread = 44| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 44 + 0 = 47

Trading the GBP/BRL

There are a few currencies that are hardly traded in the foreign exchange market. These currencies are called exotic-cross currency pairs, and the GBP/BRL is one such exotic pair.

These pairs have less market depth, less volume, and are also illiquid. GBP/BRL is a trending market. Further, the average pip movement on the 1H timeframe is 198 pips, which is considered to be volatile. Higher the volatility, lower is the cost on a trade. However, this should not be considered an advantage as it is risky to trade in highly volatile markets.

Let’s take, for example, in the 4H time frame. The Maximum pip range value is 816, and the minimum is 102. When the comparison of the fees for both the pip movements is made, we find that for 102pip movement, fess is 46.08%. But for the 816pip movement, fess is only 5.76%.

So, we can confirm that the prices are higher for low volatile markets and low for highly volatile markets. We recommend trading when the volatility is around the average values. Experienced traders who strictly follow money management can trade in a highly volatile market.

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Forex Assets

‘BNB/USD’ – Analyzing The Trading Costs Involved

Introduction

BNB/USD is the abbreviation for the cryptocurrency pair Binance coin against the US dollar. This pair is quite volatile to trade compared to coins like Bitcoin, Ether, Ripple, and Litecoin. It has a market capitalization of 2.76B. Because of its volatile nature, this pair is usually traded in cryptocurrency exchanges than forex brokers.

Understanding BNB/USD

The market price of BNB/USD represents the value of the US Dollar equivalent to one Binance coin. It is quoted as 1 BNB per X USD. For example, if the value of BNB/USD is 17.541, then we can say that each Binance coin is worth 17.541 US dollars.

BNB/USD specifications

Spread

Spread is the difference between the bid and the ask price that is set the exchanges. Below are the spread values of the BNB/USD currency pair in both ECN & STP accounts.

ECN: 45 pips | STP: 53 pips

Fee

For every position a trader opens, the broker charges some fee for it. Traders must know that this fee is applicable only on ECN accounts and not on STP accounts.

Slippage

Slippage is the difference between the price required by the trader for execution and the price at which the broker executed the price. There is this difference due to the high market volatility and slower execution speed.

Trading Range in BNB/USD

A trading range is the representation of the volatility in BNB/USD in different timeframes. The values are extracted from the Average True Range indicator. One may use the table as a risk management tool as it determines the profit/loss that a trader is possessed towards.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

BNB/USD Cost as a Percent of the Trading Range

The total cost of the trade varies based on the volatility of the market. So, we must figure out the times when the costs are less to position ourselves in the market. Below is a table representing the variation in the costs based on the change in the volatility of the market.

Note: The percentage values only depict the relative magnitude of costs and not the actual costs on the trade.

ECN Model Account

Spread = 45 | Slippage = 10 |Trading fee = 10

Total cost = Slippage + Spread + Trading Fee = 10 + 45 + 10 = 65

STP Model Account

Spread = 53 | Slippage = 10 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 10 + 53 + 0 = 63

Trading the BNB/USD

Volatility and Cost are the two factors traders take into account for trading any security in the market. With the assistance of the above tables, let’s analyze these two factors to ideally trade the BNB/USD.

Volatility

In every timeframe, we can see that the pip difference is significantly high between the minimum volatility and the average volatility. As a day trader, our aim is to make money from the movement of the market. But, if there is hardly any movement in the price, then it becomes challenging to extract some money out from the market. Hence, it is ideal to trade when the volatility is at least at the average value.

Cost

The cost increases as the volatility decrease. They are inverse to each other. In other terms, highly volatile markets have the least costs. However, it is quite risky to trade markets with extreme volatility though the costs are low. Hence, to maintain a balance between the cost and volatility, traders may find trading opportunities when the volatility is around the average values or a little above it.

Bonus

Traders can also bring down their total costs by placing orders as ‘limit’ instead of ‘market.’ This will entirely cut the slippage on the trade and therefore reduce the total cost. In the above example, the total cost would decrease by ten pips, which quite a decent reduction for just changing the type of order execution.

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Forex Assets

Analyzing GBP/BGN Exotic Pair & Comprehending The Costs Involved

Introduction

GBP stands for the British pound sterling, which is sometimes also known as the Pound. It is the 4th most traded currency in the Foreign Exchange market after USD, EURO and YEN. Whereas, BGN is the abbreviation of the Bulgarian lev, and it is the official currency of Bulgaria.

Understanding GBP/BGN

In Forex, the currencies are traded in pairs. In this case, GBP is the base currency, and BGN is the quote currency. Generally, if the value of the base currency goes up, the value of the quote currency goes down and vice versa. The market value of GBP/BGN determines the strength of BGN against GBP. It can be easily comprehended as 1GBP is equal to how much of BGN. So, if the exchange rate of GBP/BGN is 2.2409, to buy 1GBP, we need 2.2409 BGN.

Spread

Spread is the athematic difference between the bid and ask prices. Here, the bid is the selling price, whereas ask is the buying price of the currency pair. So basically, the spread is a type of commission brokers make for the services they provide. Below are the ECN and STP spread values for the pair GBP/BGN.

ECN: 19 pips | STP: 22 pips

Fees

It is obvious that we need to pay some commission to the broker every time we place a trade. A Fee is simply that commission we pay to the broker for opening a particular position. This fee varies from the type of broker we use. For example, there is no fee charged for STP account models, whereas a few pips are charged by ECN brokers.

Slippage

Slippage is referred to as the difference between the expected price at which the trader wants to buy/sell a currency pair and the price at which the trade is executed in real-time. It is important to know that slippage can occur at any time. However, it mostly happens when the market is extremely volatile.

Trading Range in GBP/BGN

Whether we make a profit or loss in a given time period depends on the movement of a currency pair. This can be assessed using the trading range table that is given below. It is basically a representation of the min, avg, and the maximum pip movement in a Forex currency pair. Evaluating the volatility of the market before taking the trade is the most important thing to do. The trading range here is to measure the volatility of the GBP/BGN pair.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

GBP/BGN Cost as a Percent of the Trading Range

Most of the time, the cost of trade depends on the type of broker we choose. This varies based on the market’s volatility. The total cost involves the costs incurred from slippage and spreads along with the trading fee. Below we have discussed the cost variation in terms of percentages. Let’s look into both the ECN and the STP models.

ECN Model Account

Spread = 19 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 19 + 5 = 27

STP Model Account

Spread = 22| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 22 + 0 = 25

Trading the GBP/BGN

The GBP/BGN is an exotic-cross currency pair and is a low volatile market. As seen in the Range table, the average pip movement on the 1-hour time frame is only 36. This clearly shows that if we trade this pair, we will have to wait for a more extended period to get some good profit as the pip movement is very less.

On any given day, if the market volatility is high, the cost of the trade is lower and vice-versa. However, this shouldn’t be considered as an advantage always because more the volatility, the riskier is our trade.

For instance, in the 1M time frame, the maximum pip range value is 1559, and the minimum is 336. When we compare the fees for both the pip movements, we find that 8.04% is the fee for the former, and it is only 1.73% for the latter. Hence we can infer that the prices are higher for low volatile markets and low for highly volatile markets.

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Forex Assets

Exploring The GBP/XPF Exotic Forex Currency Pair

Introduction To GBP/XPF

The abbreviation of GBP/XPF is British Pound vs. the French Pacific Franc. Here GBP is the official currency of the United Kingdom, and many others, it is also proven to be the fourth most traded currency in the forex market after USD, EURO, and JPY. In contrast, The CFP franc is the currency used in French overseas.

Understanding GBP/XPF

We know that in currency pairs, the first currency is the base currency, and the second currency is the quote currency. Here, the market value of GBP/XPF helps us to understand the strength of XPF against the GBP. So let’s take if the exchange rate for the pair GBP/XPF is 135.984, it means we need 135.984 XPF to buy 1 GBP.

Spread

We have two different prices for currency pairs in forex, the bid and ask price. Here the “bid” price at which we can SELL the base currency, and The “ask” price is at which we BUY the base currency. The difference between the ask price and the bid price is called the spread. Below is the spread for ECN and STP broker for the GBP/XPF pair.

ECN: 52 pips | STP: 55 pips

Fees

A Fee in forex is simply the commission we need to pay to the broker for opening a particular position. The fees depend on the type of broker we use. Like for example, we don’t have any fees for ECN, but we have some for STP.

Slippage

Slippage is the difference between the trader’s anticipated price and the actual price at which the trade is executed. It mostly occurs when the volatility of the currency pair is high and also, sometimes, when a large number of orders are placed at the same time.

Trading Range in GBP/XPF

Volatility is an essential factor that every trader should take into consideration before entering the market. The amount of capital we will win or lose in a given amount of time can be evaluated using the trading range table. Here, the trading range is a representation of the minimum, average, and maximum pip movement in a currency pair. This can be evaluated simply by using the ATR indicator combined with 200-period SMA.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

GBP/XPF Cost as a Percent of the Trading Range

The cost of trade depends mostly on the broker and also varies based on the volatility of the market. We have various costs involved in the overall trading cost that includes slippage, spreads, and sometimes the trading fee. Below is the calculation of the cost variation in terms of percentages. The conception of it is discussed in the following sections.

ECN Model Account

Spread = 52 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 52 + 5 = 60

STP Model Account

Spread = 55| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 55 + 0 = 58

Trading the GBP/XPL

There are some currencies that are very less traded in the foreign exchange market. These currencies are called exotic-cross currency pairs. GBP/XPL is one such exotic currency pairs. Further, the average pip movement on the 1H timeframe is only 14 pips, which is considered to be very less volatile.

We also have to note that if we trade in a low volatile market, our trading will be very expensive. However, It is recommended to trade in a currency pair with medium volatility. To comprehend this better, we will try to understand this with the help of an example.

As we can see in the 1M time frame, the Maximum pip range value is 865, and the minimum is 217. Now when we compare the trading cost in accordance with the pip movement, we note that in 217pip movement fess is 26.73%, and for 865pip movement, fess is only 6.71%. So overall we can conclude that trading this pair will be very expensive.

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Forex Assets

Analyzing The GBP/SAR Exotic Currency Pair

Introduction

In the Forex market, currencies are traded in pairs, and one currency is always quoted against the other. The abbreviation of GBP/SAR is British Pound Saudi Riyal. Here, the first currency GBP is the base currency, and the second one SAR is the quote currency.

Understanding GBP/SAR

We compare the value of one currency to another, and hence when we buy a currency pair, we are essentially buying the base currency and selling the quote currency. The market value of GBP/SAR determines the strength of SAR against the GBP, so if the exchange rate for the pair GBP/SAR is 4.7167, it means we need 4.7167 SAR to buy 1 GBP.

Spread

Trading the Forex market usually does not involve in spending a lot of commissions like the Stock market. Here, Forex brokers make a profit through spreads. The difference between the Bid and the Ask prices of an asset is called the spread. Some broker has the cost inbuilt into the buy and sell prices of the currency pair we want to trade instead of charging a separate fee. Below are the spread values of ECN and STP brokers for the GBP/SAR pair.

ECN: 40 pips | STP: 44 pips

Fees

A Fee is simply the charges we pay to the broker for executing a particular trade. The fee varies from the type of broker we use. For example, the fee on the STP account model is zero, but we can expect a few pips on ECN accounts.

Slippage

Slippage is the implementation of a trade at a price different from that requested by a trader. Slippage can either be positive (be additional profit) or negative (additional loss) and Mostly occurs when the market is volatile.

Trading Range in GBP/SAR

The trading range is used here is to measure the volatility of the GBP/SAR pair. The amount of money we will win or lose in a given amount of time can be assessed using the trading range table. The minimum, average, and maximum pip movement of the currency pair is represented in the trading range. This can be evaluated simply by using the ATR indicator combined with 200-period SMA.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

GBP/SAR Costs as a Percent of the Trading Range

The cost of trade depends on the broker and differs according to the volatility of the market. This is because the trading cost includes slippage, fees, and the spread. The cost of variation in terms of percentage is given below. We will look into both the ECN model and the STP model.

ECN Model Account

Spread = 40 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 40 + 5 = 48

STP Model Account

Spread = 44| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 44 + 0 = 47

Trading the GBP/SAR Forex pair

The GBP/SAR is an exotic-cross currency pair and is a low volatile market. Looking at the pip range table, the average pip movement on the 1H timeframe is only 62 pips. Hence, The volatility of this currency pair is on the lower side. We know that the higher the volatility, the lower will be the cost to execute the trade. However, this is not an advantage as trading in a volatile market involves more risk.

Let’s take, for example, in the 1M time frame, the Maximum pip range value is 3952, and the minimum is 896. When we compare the trading fees for both the pip movements, we note that for 896pip movement fess is 5.36%, and for 3952pip movement, fess is only 1.21%. As we can conclude from the above example, trading the GBP/SAR currency pair will be a bit expensive.

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Forex Assets

Trading The EOS/USD Crypto-Fiat pair & Understanding The Costs Involved

Introduction

EOS is a blockchain-based cryptocurrency, as well as a platform for decentralized app execution. This blockchain was developed despite the existence of Bitcoin and Ethereum to solve the problem of speed and scalability.

Understanding EOS/USD

The price of EOS/USD represents the value of the US Dollar equivalent to one EOS. It is quoted as 1 EOS per X USD. So, if the market price of EOS/USD is 2.5290, these many dollars are required to buy one EOS.

EOS/USD specifications

Spread

The difference between the bid & ask prices is known as spread. It changes with the execution model used brokers. Below are the spreads for both ECN & STP models for EOS/USD pair.

Spread on ECN: 10 pips | Spread on STP: 13 pips

Fee

A Fee is basically the commission on the trade. Note that there is a fee on ECN accounts, not STP.

Slippage

Due to high market volatility and the broker’s slower execution speed, slippage occurs. It is a difference in the price intended by the trader and price executed by the broker.

Trading Range in EOS/USD

The trading range is basically a tabular representation of the pip movement in EOS/USD for different timeframes. These numbers can be used traders as a risk management tool as determines the approx. profit/loss that can be made on a trade.

Procedure to assess Pip Ranges

  1. Add the Average True Range indicator to your price chart
  2. Then set the period to one
  3. Add a 200-period Simple Moving Average to this indicator
  4. You can assess a large time period by shrinking the price chart
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EOS/USD Cost as a Percent of the Trading Range

The total cost comprising of the spread, slippage, and trading fee, changes with the volatility of the market. Hence, it is necessary for traders to position themselves to avoid paying high costs.

Below is a table representing the variation in the costs for different values of volatility.

ECN Model Account

Spread = 10 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 10 + 5 = 18

STP Model Account

Spread = 13 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 13 + 3 + 0 = 16

Trading the EOS/USD

The volatility and liquidity in this pair are similar to coins like Bitcoin and Ethereum. Hence, this makes EOS/USD a tradable pair. The spread in this pair is between 10-15 pips, which is extremely less compared to its volatility. Due to this, the costs reduce significantly. The highest cost percentage is only 18%.

However, we cannot ignore the fact about the volatility in this pair. This pair is pretty volatile and must be traded cautiously. It is recommended for traders to trade when the volatility of the market is around the average values. Furthermore, the costs can be reduced even further by placing orders as a limit or stop instead of the market. In doing so, the slippage will become zero and will reduce the total cost of the trade.

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Forex Assets

Exploring The GBP/ILS Forex Exotic Currency Pair

Understanding GBP/ILS

GBP/ILS is the abbreviation for the Pound sterling against the Israeli Shekel. In currency pairs, the first currency GBP here is the base currency and the second currency ILS is the quote currency. In Forex currency pairs, if the value of, let’s say, the base currency goes up, the quote currency’s value will go down and vice versa.

Also, when we buy a currency pair, we buy the base currency and implicitly sell the quote currency. The market value of GBP/ILS determines the strength of ILS against the GBP that can be understood as 1 Pound is equal to how much ILS. So if the conversion rate for the pair GBP/ILS is 4.4725, it means to buy 1 GBP, we need 4.4725 ILS.

Spread

We know that the “bid” is the price at which we sell the currency, and “ask” is the price is at which we can BUY the currency. The arithmetic difference between the ask and bid price is known as the spread. The spread is how most of the brokers make money. There are also brokers who charge a separate fee instead of making profits in the form of spread. Below are the ECN and STP spreads for the GBP/ILS Forex pair.

ECN: 54 pips | STP: 56 pips

Fees

Every time we place a trade, some commission must be paid to the brokers, and that is known as a fee. This fee varies from broker to broker. For instance, there is no fee charged on STP account models, but ECN brokers do charge some fee.

Slippage

The arithmetic difference between the expected price of a trader and the price at which the trade is executed is known as slippage. It can occur mostly when the market is volatile & fast-moving. Another reason when the slippage may occur is when we place a huge number of orders at the same time.

Trading Range in GBP/ILS

The trading range here is to measure the volatility of the GBP/ILS pair. Whether we make a profit or loss in a given time period depends on the movement of a currency pair that can be assessed using the trading range table. It is a representation of the min, avg, & max pip movement in a currency pair.

Procedure to assess Pip Ranges

  1. Add the Average True Range indicator to your price chart
  2. Make sure to set the period to one
  3. Then add a 200-period Simple Moving Average to ATR
  4. Shrink the chart in order to assess a significant period
  5. Select the timeframe of your choice
  6. Floor level must be measured and set that value as the min
  7. 200-period SMA must be measured and set that value as average
  8. Finally, measure the peak levels and consider this as Max values.

GBP/ILS Cost as a Percent of Trading Range

The cost of trade depends on the broker and mostly varies based on the market’s volatility. The below tables represent the cost variation in terms of percentages.

ECN Model Account

Spread = 54 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 54 + 5 = 62

 

STP Model Account

Spread = 56| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 56 + 0 = 59

Trading the GBP/ILS

The GBP/ILS is an exotic-cross currency pair and is a trending market. We consider the market to be trending when the price generally moves in one direction, either downwards or upwards. As seen in the Range table, the average pip movement on the 1-hour time frame is 112. This clearly shows that the pip movements are normal, and this currency pair is tradable.

Note that the higher the volatility, the lower is the cost of the trade. However, this is not an advantage as it is risky to trade highly volatile markets. Let’s take, for example, in the 1M time frame, the Maximum pip range value is 3469, and the minimum is 1080. When we compare the fees for both the pip movements, we find that for 1080pip movement fess is 5.74%, and for 3469pip movement, fess is only 1.79%.

So, we can confirm that the prices are higher for low volatile markets and low for highly volatile markets. It is recommended to trade when the market volatility is around the average values, but experienced traders who strictly follow money management can trade in a volatile market. The volatility here is moderate, and the costs are a little high compared to the maximum values. But, if our priority is towards reducing costs, we may trade when the volatility of the market is around the maximum values.

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Forex Assets

Asset Analysis – Exploring The GBP/AED Forex Currency Pair

Introduction

We all know that official currencies of the two countries are paired for being exchanged in reference to each other. In GBP/AED, GBP stands for the British pound sterling, and it is is the official currency of the United Kingdom. It is also the 4th most traded currency in the Forex Market and stands right after USD, EURO and YEN. Whereas the AED is known as the United Arab Emirates Dirham, and it is the official currency of the UAE.

GBP/AED

GBP/AED is the abbreviation of the Pound sterling against the Emirati Dirhams. In currency pairs, the first currency is the base currency, while the second currency is the quote currency. In this case, GBP is the base currency, and AED is the quote currency.

Understanding GBP/AED

In the Forex market, if the base currency’s value goes down, the value of the quote currency goes up and vice versa. Also, when we buy a currency pair, we buy the base currency and implicitly sell the quote currency.

The market value of GBP/AED determines the strength of AED against the GBP that can be easily understood as 1GBP is equal to how much AED. So if the exchange rate for the pair GBP/AED is 4.5748, it means that we need 4.5748 AED to buy 1 GBP.

Spread

Forex brokers have two different prices for currency pairs: the bid and ask price. The bid price is the selling price, and ask is the buy price. The difference between the ask and the bid price is called the spread. Spread is basically a type of commission by which brokers make their money. Below are the ECN and STP spread values for the GBP/AED pair.

ECN: 27 pips | STP: 30 pips

Fees

Each time we place a trade, we need to pay some commission on it. A Fee is simply that commission we pay to the broker for opening a particular position. The fee also varies from the type of broker we use; for example, there is no fee on STP account models, but a few pips on ECN accounts.

Slippage

Slippage refers to the difference between the trader’s expected price and the actual price at which the trade is executed. It can occur at any time but mostly happens when the market is fast-moving and volatile. Also, it occurs at the times when we place a large number of orders at the same time.

Trading Range in GBP/AED

The trading range here is to measure the volatility of the GBP/AED pair. Whether we make a profit or loss in a given time period depends on the movement of a currency pair that can be assessed using the trading range table. It is a representation of the minimum, average, and maximum pip movement in a currency pair. This can be evaluated simply by using the ATR indicator combined with 200-period SMA.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

GBP/AED Cost as a Percent of the Trading Range

The cost of trade mostly depends on the broker and varies based on the volatility of the market. This is because the total cost involves slippage and spreads apart from the trading fee. Below is the representation of the cost variation in terms of percentages. The comprehension of it is discussed in the following sections. We will look into both the ECN model and the STP model.

ECN Model Account

Spread = 27 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 27 + 5 = 35

STP Model Account

Spread = 30| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 30 + 0 = 33

Trading the GBP/AED

The GBP/AED is an exotic-cross currency pair and is mostly ranging. The volatility of this currency pair is on the lower side. As seen in the Range table, the average pip movement on the 1-hour time frame is only 64. This clearly shows that if we trade in this pair, we will have to wait for a more extended period of time to get some good profit because of such a less movement in the pips.

Note that the higher the volatility, the lower the cost of the trade. However, this is not an advantage as it is risky to trade highly volatile markets. Let’s take, for example, in the 1M time frame, the Maximum pip range value is 3825, and the minimum is 923. When we compare the fees for both the pip movements, we find that for a 923 pip movement, the fee is 3.79%, and for 3825pip movement, fess is only 1.07%.

So, we can confirm that the prices are higher for low volatile markets and low for highly volatile markets. It is safe to trade when the volatility is around the average values, but experienced traders who strictly follow money management can trade the volatile markets as the cost of trade is less there. Cheers!

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Forex Assets

Trading The XRP/USD Pair & Analysing The Costs Involved

Introduction

XRP/USD is the abbreviation for Ripple against the US Dollar. This pair is used for trading the Ripple cryptocurrency. Also, traders can trade Ripple against other fiat currencies.

Understanding XRP/USD

The value of XRP/USD represents the value of the US Dollar equivalent to one Ripple. It is quoted as 1 XRP per X USD. For example, if the value of XRP/USD is 0.1912, then it can be said that each Ripple is worth 0.1912 US Dollars.

XRP/USD specifications

Spread

Spread is the difference between the bid and the ask price quoted by the brokers. It varies based on the execution model used. Below are the ECN & STP spreads for the XRP/USD pair.

Spread on ECN: 50 pips | Spread on STP: 53 pips

Fee

The fee is the commission that is levied by the brokers on each trade. This fee is only applicable to ECN brokers, not STP brokers.

Slippage

When orders are executed on the ‘market,’ the price requested by the trader is different from the price given by the broker. This can happen either because of high market volatility or broker’s execution speed

Trading Range in XRP/USD

The minimum, average, and maximum pip movement in XRP/USD are given below. One can use these values to determine the profit/loss they could make in a given timeframe.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

XRP/USD Cost as a Percent of the Trading Range

By applying the volatility values to the total cost of a trade, the variation in the costs for varying volatilities can be determined. Below are two tables representing the same.

ECN Model Account

Spread = 50 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 50 + 5 = 58

STP Model Account

Spread = 53 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 53 + 0 = 56

Trading the XRP/USD

While trading a pair, there are two factors that must be taken into consideration, namely, volatility and cost.

Volatility

The minimum in the 4H timeframe is 18 pips, while 142 pips are the maximum. And the average stands at 63. So, if a trader wishes to trade the 4H timeframe, then they should make sure that the current volatility is at or above the average volatility. This is because one can make money only when there is movement in the market.

Cost

Cost is not constant but varies as the volatility changes. The cost percentages in the minimum column are the highest compared to the average and maximum columns. This means that the costs are very high for highly volatile markets. Hence, it must be avoided.

The benefit with limit orders

Traders who trade with limit orders have an added benefit than those who trade with market orders. With limit orders, the total cost of the trade does not include the slippage. This hence brings down the cost of the trade to a decent extent.

This concludes the analysis of BCH/USD. We hope you found it interesting and useful. Stay tuned for more such asset analysis. Cheers!

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Forex Assets

Analyzing The BCH/USD Crypto-Fiat Pair

Introduction

BCH/USD is a cryptocurrency abbreviated for the Bitcoin Cash against the US Dollar. This is the highest traded cryptocurrency in terms of volume. Also, it is a 24/7 market. Note that, Bitcoin Cash is not the same Bitcoin; both are two different cryptocurrencies.

Understanding BCH/USD

The price of BCH/USD represents the value of the US Dollar that makes up one Bitcoin Cash. It is quoted as 1 BCH per X USD. For example, if the value of BCH/USD is 234.06, these many US Dollars are required to purchase one Bitcoin Cash.

BCH/USD Specifications 

Spread

Spread is the difference between the bid and the ask price. Spread is different with different brokers and the type of execution model they use. Below are the ECN & STP values for the BCH/USD pair.

Spread on ECN: 400 pips (4.00 USD) | Spread on STP: 450 pips (4.50 USD)

Fee

A Fee is a commission paid on each position a trader takes and closes. This fee is charged only by ECN brokers. The slippage for each lot traded is a pip. The seems to be less because one lot accounts for only 1 BCH.

Slippage

Slippage is the difference between the price demanded by the trader and the price given by the broker. There are two reasons for slippage to occur:

  • High market volatility
  • Broker’s execution speed

Trading Range in BCH/USD

A Trading range is the representation of the volatility in BCH/USD for different timeframes. The numbers help in determining the approximate risk and reward on a trade.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

BCH/USD Cost as a Percent of the Trading Range

A Fee is a variable that varies as the volatility of the market changes. Below are tables depicting the variation in the costs with the change in the volatility.

ECN Model Account

Spread = 400 | Slippage = 10 |Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 10 + 400 + 1 = 411

STP Model Account

Spread = 450 | Slippage = 10 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 10 + 450 + 0 = 460

Trading the BCH/USD

As mentioned, BCH/USD is currently the most traded cryptocurrency in the market. Therefore, one can expect enough volatility and liquidity. The volatility in BCH/USD is very high. For example, the minimum volatility on the 1H timeframe is 20, while the maximum is 118 on the same timeframe, which is five times the minimum. Hence, this makes this pair highly volatile and risky as well.

So, it is ideal for traders to trade when the volatility is between the average values. The volatility during such times is neither too high nor too low. Also, the costs aren’t too high. If traders wish to reduce costs even further, they could trade via limit or stop orders instead of market orders, as this would completely cut the slippage on the trade. The cost variations when the trades are executed either by limit or stop is given below.

ECN Model Account (Using Limit Orders)

Spread = 400 | Slippage = 0 |Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 0 + 400 + 1 = 401

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Forex Assets

‘LTC/USD’ – Understanding The Crypto/Fiat Pair & Trading Costs Involved

Introduction

Cryptocurrencies are traded in pairs by pairing them with a fiat currency. Always, the cryptocurrency is written on the left and the fiat currency on the right. LTC/USD is a cryptocurrency, which is an abbreviation for the Litecoin versus the US Dollar. Like the Bitcoin and Ethereum, Litecoin is extensively traded in the exchange market.

Understanding LTC/USD

The market price of LTCUSD depicts the value of the US Dollar, which is equivalent to 1 Litecoin. It is quoted as 1 LTC per X USD. For example, if the value of LTCUSD is 41.69, then one Litecoin is worth 41.69 US Dollars.

LTC/USD specifications

Spread

Spread is the difference between the bid and the ask price in the market, where bid price is given considered when shorting a pair and ask price when going long on a pair. The varies from broker to broker. It also differs based on the type of execution model used. Below are the spreads for the LTC/USD pair for both ECN & STP accounts.

  • Spread on ECN: 50 pips (0.5 USD)
  • Spread on STP: 60 pips (0.6 USD)

Fee

ECN brokers charge some commission on every position a trader opens and closes. The fee for ECN accounts is about $0.18 per standard lot, which corresponds to 18 pips.

Slippage

Slippage is the difference between the price asked by the user and the price given by the broker. There is this difference due to two reasons – High market volatility & broker’s execution speed.

Trading Range in LTC/USD

Below is the trading range table for the LTCUSD, which represents the minimum, average, and maximum volatilities of a pair for different timeframes using the ATR indicator. These values can prove to be helpful for assessing one’s profit/loss on a trade.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

LTC/USD Cost as a Percent of the Trading Range

The cost as a percent of the trading range represents the variation of cost on a trade based on the change in the volatility of the market. And these variations are indicated as a percentage. Using the magnitude of the percentages, we shall determine the ideal times of the day to trade this coin.

ECN Model Account

Spread = 50 | Slippage = 5 |Trading fee = 18

Total cost = Slippage + Spread + Trading Fee = 18 + 50 + 5 = 73

STP Model Account

Spread = 60 | Slippage = 5 | Trading fee = 0Total cost = Slippage + Spread + Trading Fee = 5 + 60 + 0 = 65

Trading the LTC/USD

LTCUSD is a crypto-fiat pair that has got enough volatility and liquidity to trade in the market. LTC is the fourth highest traded coin in terms of volume. However, it is not apt to trade anytime during the day. There are ways through which one reduces their costs for the same trade.

In the above table, if the percentages are high, then the costs are very high and vice versa. So, the cost is more for low volatile markets and less for high volatile markets. If you are a scalper or short-term trader, you may trade when the volatility is high as the profit margin is small, and you can avoid high costs.

Positional traders – these traders usually aim for large movements, and high costs become a little insignificant for their big pip movements. So, such traders may trade when the volatility is around the average values. Finally, it is not advisable to trade during low volatilities because the costs are high, and there is barely any movement in the market.

Slippage is a variable in total costs that can be eliminated by placing orders as ‘limit’ or ‘stop.’ We hope you found this analysis on LTCUSD useful. Stay tuned for more informative content. Cheers.

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Forex Assets

Exploring The ETH/USD Pair & The Relative Costs Involved

Introduction

Trading cryptocurrencies is similar to trading in the Forex market, but the only difference being, both base and quote currencies are not fiat currencies. In crypto pairs, one of them is a virtual currency, and the other is a fiat currency. ETH/USD is a cryptocurrency pair, which is an abbreviation for Ethereum against the US Dollar. Participants can trade them via Forex brokers or through cryptocurrency exchanges.

Understanding ETH/USD

The value of ETHUSD represents the value of the US Dollar that is required to purchase one. It is quoted as 1 ETH per X USD. For instance, if the market price of ETHUSD is 170.46, then around 170 US Dollars are needed to buy one ETH.

ETH/USD Specifications 

Spread

The difference between the bid price and the ask price marked by the brokers is called the spread. Spread is the main source of revenue for brokers. Spread on major and minor currency pairs is typically very low. But, in cryptocurrencies, the spread is usually high. Below are the spread values of ECN & STP accounts for the ETH/USD pair.

  • Spread on ECN: 200 pips (2 USD)
  • Spread on STP: 250 pips (2.5 USD)

Fee

A Fee is applicable only on ECN accounts and the pro accounts of brokers. Typically, it is between 40-50 pips.

Slippage

Slippage is the difference between the price at which a trader opened a position and the price given by the broker. Due to the high volatility of the market and slow execution by the brokers, slippage occurs.

Trading Range in ETH/USD

Below is the representation of the volatility from minimum to maximum for ETHUSD in different timeframes. These numbers are very helpful in assessing one’s risk on a trade.  

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

ETH/USD Cost as a Percent of the Trading Range

With the application of the volatility values with the total cost on the trade, the variation in the cost of a trade can be assessed. To do so, the ratio between the total cost and volatility is taken and expressed in terms of a percentage.

The magnitude of the costs represents how high the costs are. If the percentages are large, it indicates high costs and vice versa.

ECN Model Account

Spread = 200 | Slippage = 15 |Trading fee = 45

Total cost = Slippage + Spread + Trading Fee = 15 + 200 + 45 = 260

STP Model Account

Spread = 250 | Slippage = 15 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 15 + 250 + 0 = 265

Trading the ETH/USD

Cryptocurrencies can be traded just like any other asset. In ETHUSD, the volatility is good enough for both short-term and long-term traders. Though the volatility values appear to be high, they don’t have a large reflection on your profit/loss. This is because, unlike forex currencies where one lot was equivalent to 100,000 units of the base currency, one lot in ETHUSD represents only 10 units of ETH.

From the above volatility table, it is seen that the costs are more when the volatility of the market is low and is less when the volatility is high. So, trading this pair majorly depends on the type of trader you are. For example, scalpers might trade when the volatility is high to get the greatest number of pips in a short amount of time. If they do so, they can get the benefit of lower costs.

In general, costs on a trade can be reduced by placing orders as ‘limit’ or ‘stop.’ In such orders, the slippage becomes nil. Hence, the total cost would be brought down to a good extent. The cost variations for limit orders or stop orders are given below for your reference and comparison.

ECN Model Account (Using Limit Orders)

Spread = 200 | Slippage = 0 |Trading fee = 45

Total cost = Slippage + Spread + Trading Fee = 0 + 200 + 45 = 245

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Forex Assets

BTC/USD – Trading Costs Involved While Trading This Crypto-Fiat Pair

Introduction

Apart from currencies pairs, exchanges allow trading of cryptocurrencies as well. Cryptocurrencies can be bought and sold in the exchange market through Forex brokers. Trading cryptocurrencies can be closely related to Forex trading but not stock trading. This is because cryptos are traded as pairs and not individually. In this series, we will be analyzing the trading costs involved while trading cryptocurrencies that are paired with fiat currencies (Ex: USD).

BTC/USD is a cryptocurrency pair where BTC stands for Bitcoin, and USD stands for US Dollar. This pair is traded through Forex brokers as CFDs, or through cryptocurrency exchanges where cryptos are bought and sold exclusively.

Understanding BTC/USD

The price of BTC/USD in the exchange market represents the value of the US Dollar equivalent to one 1 Bitcoin. It is quoted as 1 BTC per X USD. For example, if the current market price of BTCUSD is 7356.50, then it can be said that one Bitcoin is equal to the US $7356.50.

BTC/USD specifications

Spread

Spread is the difference between the bid and the ask price in the exchange market. It is determined by the brokers and exchanges, and it hence varies from time to time. Typically, the spreads for trading cryptocurrencies are very high. In recent years, the spread of coins having two decimal places is between 1500-6000 pips. The approx. spread on ECN and STP accounts are given below.

  • Spread on ECN: 3000 pips (30 USD)
  • Spread on STP: 3050 pips (30.5 USD)

Fees

The fee is simply the commission paid for the position a trader takes. It is charged only for ECN and Pro accounts and not for STP accounts. For our analysis, we shall keep the fee at 45 pips.

Slippage

Slippage is the difference between the price at which a client executed trade and the price which was actually given by the broker. This difference occurs either because of high market volatility or speed of trade execution.

Trading Range in BTC/USD

The trading range is the representation of the pip movement in the pair for different timeframes. The values are calculated using the average true range indicator. And the procedure to assess it is given below as well.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

BTC/USD Cost as a Percent of the Trading Range

Cost is a factor that varies with the change in the volatility of the market. By finding the ratio between the total cost and volatility, the variation in the costs is measured.

ECN Model Account

Spread = 3000 | Slippage = 25 |Trading fee = 45

Total cost = Slippage + Spread + Trading Fee = 25 + 3000 + 45 = 3070

STP Model Account

Spread = 3050 | Slippage = 25 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 25 + 3050 + 0 = 3075

The Ideal way to trade the BTC/USD

It is a general impression that trading cryptos are very risky because of its high volatility. But it is not completely true. To clear the misconception, consider the following example.

The pip value of BTC/USD per lot is 0.01 USD. That is, for every pip up or down, you will gain or lose 0.01 USD. The average pip movement in the 1H timeframe is 9100 pips. So, if you trade one lot of BTC/USD, you will win or lose about $0.01 x 9100 = $91 in a time frame of one hour. Hence, though the pip movement seems to be high, the profit/loss remains within decent boundaries.

Considering the cost variation in the above tables, it can be inferred that the costs are more for low volatile markets and less for a highly volatile market. But, the cost for average volatility acts as a median. Hence, trading when the volatility is around the average values is recommended. Furthermore, costs can be lowered by trading via limit orders instead of market orders. In doing so, the slippage on the trade will be nullified and will not be included in the total cost. In the above example, the total cost would reduce by 25 pips.

That’s about the trading costs involved while trading the BTC/USD pair. We will be discussing more Crypto/Fiat pairs in the upcoming articles. In case of any queries, let us know in the comments below. Cheers!

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Understanding The GBP/HUF Exotic Currency Pair

Introduction

GBP stands for British Pound Sterling, and it is the 4th most traded currency in the Foreign Exchange market after USD, EURO and YEN. It is the official currency of the United Kingdom and some other countries like Jersey, South Georgia, and Guernsey. Whereas HUF stands for Hungarian forint, and it is the official currency of Hungary.

GBP/HUF

We know that the currencies in the Forex market are traded in pairs. GBP/HUF is the abbreviation for the Pound sterling against The Hungarian Forint. In this case, the first currency (GBP) is the base currency, and the second (HUF) is the quote currency.

Understanding GBP/HUF

To find the relative value of one currency in the Forex market, we need another currency to compare. If the value of the base currency goes down, the value of the quote currency goes up and vice versa. The market value of GBP/HUF determines the strength of HUF against the GBP. It can be easily understood as 1GBP is equal to how much of HUF. So if the exchange rate for the pair GBP/HUF is 414.425, it means we need 414.425 HUF to buy 1 GBP.

 

Spread

Forex brokers have two different prices for currency pairs: the bid and ask price. Here the “bid” price at which we can SELL the base currency, and The “ask” price is at which we can BUY the base currency. Hence, the difference between the ask and the bid price is called the spread. Some brokers, instead of charging a separate fee for trading, they already have the fees inbuilt in the spread. Below are the ECN and STP for the pair GBP/HUF.

ECN: 57 pips | STP: 60 pips

Fees

When we place any trade, there is some commission we need to pay to the broker. A Fee is simply that commission that we pay to the broker each time we execute a position. The fee also varies from the type of broker we use; for example, there is no fee on STP account models, but a few pips on ECN accounts.

Slippage

Slippage alludes to the difference between the expected price at which the trader wants to execute the trade and the price at which the trade is being executed. It can occur at any time but mostly happens when the market is fast-moving and volatile. Also, sometimes when we place a large number of orders at the same time.

Trading Range in GBP/HUF

The trading range is a tabular representation of the pip movement in a currency pair for different timeframes. Using this, we can assess the risk on a trade for each given timeframe. A trading range essentially represents the minimum, average, and maximum pip movement in a currency pair. This can be evaluated easily by using the ATR indicator combined with 200-period SMA.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

GBP/HUF Cost as a Percent of the Trading Range

The cost of trade mostly depends on the broker and varies based on the volatility of the market. This is because the total cost involves slippage and spreads apart from the trading fee. Below is the representation of the cost variation in terms of percentages. The comprehension of it is discussed in the following sections. We will be looking into both the ECN model and the STP model.

ECN Model Account

Spread = 57 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 57 + 5 = 65

STP Model Account

Spread = 60|Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 60+ 0 = 63

Trading the GBP/HUF

The GBP/HUF is an exotic-cross currency pair, and the volatility in this pair is decent. As seen in the Range table, the average pip movement on the 1-hour time frame is 205. Here in the GBP/HUF pair, HUF is an emerging currency. We must know that the cost of trade decreases ad the volatility od the pair increases. But this should not be considered as an advantage because it is risky to trade high volatile markets as the price keeps fluctuations.

For instance, in the 1-hour timeframe, the maximum pip range value in this pair is 343 pips, and the minimum pip range value is 27 pips. When we compare the fees for both the pip movements, we find that for 27 pip movement fees is 270.74%, and for 343 pip movement, the fess is only 18.95%.

So, we can confirm that the prices are higher for low volatile markets and high for highly volatile markets. Hence we must always try to make our entries and exits when the volatility is minimum or average than to that of maximum values. But if your preference is absolutely towards reducing your trading costs, you may trade when the volatility of the market is around the maximum values.

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Forex Assets

Analyzing The GBP/TWD Forex Currency Pair

Introduction to GBP/TWD

GBP stands for British pound sterling, and it is typically known as Pound. It is the official currency of the United Kingdom and some other countries like Jersey, South Georgia, and Guernsey. The pound is also the 4th most traded currency in the foreign exchange after USD, EUR & YEN. Whereas TWD is the abbreviation of The New Taiwan dollar. The central bank of Taiwan issues this currency.

GBP/TWD

Currency pairs are the national currencies from two countries coupled for being exchanged in reference to each other. In the Forex market, one currency is always quoted against the other. GBP/TWD is the abbreviation for the Pound sterling against the New Taiwan dollar. In this case, the first currency(GBP) is the base currency, and the second(TWD) is the quote currency.

Understanding GBP/TWD

In Forex, to find out the relative value of one currency, we need another currency to compare. If the value of the base currency goes down, the value of the quote currency goes up and vice versa. The market value of GBP/TWD determines the strength of TWD against the GBP. This can be easily understood as 1GBP is equal to how much of TWD. So if the exchange rate for the pair GBP/TWD is 37.093, it means we need 37.093 TWD to buy 1 GBP.

Spread

Forex brokers have two different prices for currency pairs: the bid and ask price. The bid price is the selling price, and ask is the buy price. The difference between the ask and the bid price is called the spread. Spread is basically a type of commission by which brokers make their money. Below are the ECN and STP for the pair GBP/TWD.

ECN: 49 pips | STP: 52 pips

Fees

Each time we place a trade, we need to pay some commission on it. A Fee is simply that commission we pay to the broker for opening a particular position. The fee also varies from the type of broker we use; for example, there is no fee on STP account models, but a few pips on ECN accounts.

Slippage

Slippage refers to the difference between the trader’s expected price and the actual price at which the trade is executed. It can occur at any time but mostly happens when the market is fast-moving and volatile. Also, sometimes when we place a large number of orders at the same time.

Ranges in GBP/TWD

The Range is a measure of volatility. It tells how much the currency pair has moved in a determined period. Whether a trader makes a profit or loss in a given time period depends on the movement of a currency pair and can be determined using the trading range table. It is a representation of the minimum, average, and maximum pip movement in a currency pair. This can be evaluated simply by using the ATR indicator combined with 200-period SMA.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

GBP/TWD Cost as a Percent of the Trading Range

The cost of trade mostly depends on the broker and varies based on the volatility of the market. This is because the total cost involves slippage and spreads apart from the trading fee. Below is the representation of the cost variation in terms of percentages. The comprehension of it is discussed in the following sections. We will look into both the ECN model and the STP model.

ECN Model Account

Spread = 49 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 49 + 5 = 57

STP Model Account

Spread = 52| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 52 + 0 = 55

Trading the GBP/TWD Forex Pair

The GBP/TWD is an exotic-cross currency pair and is a ranging market. A market is said to be ranging when the price hits the support and resistance at least three times. As seen in the Range table, the average pip movement on the 1-hour time frame is only 47. This clearly shows that if we trade in this pair, we will have to wait for a more extended period of time to get some good profit because of such a less movement in the pips.

Here in GBP/TWD, TWD is considered to be an emerging currency. Note that the higher the volatility, the lower is the cost of the trade. However, this is not an advantage as it is risky to trade highly volatile markets.

For example, in the 1M time frame, the maximum pip range value is 3009 and in minimum pip range, the value is 687. When we compare the fees for both the pip movements, we find that for 687 pip movement fees is 8.30%, and for 3009pip movement, fess is only 1.89%.

So, we can infer that the cost of trade is higher in the low volatile markets and high in the highly volatile markets. It is recommended to trade when the volatility is around the minimum values. The volatility here is low, and the costs are a little high compared to the average and the maximum values. But, if our priority is not towards reducing costs, we may trade when the volatility of the market is around the maximum values.