Tag: Crypto Fiat Pair

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

Introduction

Introduction

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

Introduction

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

Introduction

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

Introduction

Introduction

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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‘BNB/USD’ – Analyzing The Trading Costs Involved

Introduction

Introduction

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.