Tag: CZK

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Forex Assets

Analyzing the Trading Costs on ‘NZD/CZK’

Introduction NZD/CZK is the abbreviation for the Euro Area’s Euro against the Czech Koruna. This pair is considered an exotic-cross currency pair. Here, the NZD is the base (first) currency, and the CZK is the quote (second) currency. NDZ is the official currency used in New Zealand, while CZK is the native currency of the […]

Introduction NZD/CZK is the abbreviation for the Euro Area’s Euro against the Czech Koruna. This pair is considered an exotic-cross currency pair. Here, the NZD is the base (first) currency, and the CZK is the quote (second) currency. NDZ is the official currency used in New Zealand, while CZK is the native currency of the […]

Introduction

NZD/CZK is the abbreviation for the Euro Area’s Euro against the Czech Koruna. This pair is considered an exotic-cross currency pair. Here, the NZD is the base (first) currency, and the CZK is the quote (second) currency. NDZ is the official currency used in New Zealand, while CZK is the native currency of the Czech Republic.

Understanding NZD/CZK

The price of this pair in the foreign exchange market defines the value of CZK equivalent to one NZD. It is quoted as 1 NZD per X CZK. So, if the value of this pair is 14.8124, these many Korunas are required to purchase one NZD.

Spread

Spread is the mathematical difference between the bid and the asking price offered by the broker. This value is distinct in the ECN account model and STP account model. An approximate value for NZD/CZK pair is given below.

ECN: 43 pips | STP: 48 pips

Fees

The fee is the price/compensation that one pays for the trade. There are no charges on STP accounts, but a few additional pips are levied on ECN accounts.

Slippage

Slippage is a variation between the value proposed by the trader, and the trader indeed received from the broker.

Trading Range in NZD/CZK

The tabular interpretation of the pip movement of a currency pair in separate timeframes is called as the trading range is the. These values are helpful in influencing the profit that can be produced from a trade before-hand. To uncover the value, you must multiply the below volatility price 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.

NZD/CZK Cost as a Percent of the Trading Range

Trading Range is the interpretation of the total price variation of trades for distinct timeframes and volatilities. The values are achieved by discovering the ratio amongst the total price and the volatility value; it is expressed as a percentage.

ECN Model Account

Spread = 43 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 3 + 43 + 8 = 56 

 

STP Model Account

Spread = 48 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 48 + 0 = 53

Trading the NZD/CZK

The bigger the percentage values, the higher is the price on the trade. From the preceding tables, we can see that the values are sizeable in the min column and relatively less significant in the maximum column. This means that the prices are high when the volatility of the market is low.

It is neither suitable to trade when the market’s volatility is elevated nor when the costs are high. To balance out between both these aspects, it is perfect to trade when the volatility of the pair is in the array of the average values.

Additionally, to decrease your costs even beyond, you may place trades using limit orders as a substitute for market orders. In executing so, the slippage will not be involved in the computation of the total costs. And this will put down the cost of the trades by a sizeable number. An example of the same is given below.

STP Model Account (Using Limit Orders)

Spread = 48 | Slippage = 0 |Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 48 + 0 = 48

Categories
Forex Assets

Trading The USD/CZK Exotic Forex Currency Pair

Introduction

Introduction

Introduction

USDCZK is the short-form for the US Dollar against the Czech Koruna. Since CZK is involved in this pair, it is classified as an exotic currency pair. Here, the US Dollar is called the base currency and the CZK the quote currency.

Understanding USD/CZK

The value of USDCZK determines the value of CZK equivalent to one USD. It is quoted as 1 USD per X CZK. So, if the market value of this pair is 22.4773, then many Koruna is required to buy one US Dollar.

Spread

Spread is the difference between the bid and the ask prices set by the broker. The amount of spread varies based on the type of execution model.

ECN: 16 pips | STP: 18 pips

Fees

The fee is a commission that has to be paid to the broker for every trade the clients take. This value depends on the type of execution model used by the broker. As a matter of fact, there is no fee on STP accounts.

Slippage

The difference between the trader’s required price and the broker’s executed price is referred to as the slippage. The slippage size depends on the broker’s execution speed and the volatility of the market.

Trading Range in USD/CZK

The minimum, average, and maximum volatility of the market are necessary to assess the profit/loss that can be made on a trade. And is a representation of the same for USDCZK.

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 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.

USD/CZK Cost as a Percent of the Trading Range

The total cost depends on the volatility of the market. Below is a table that shows the variation in the total costs for different volatilities in terms of percentages.

NOTE: These percentages are obtained by finding the ratio between the total cost and the volatility of the market in different timeframes.

ECN Model Account

Spread = 16 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 16 + 3 = 22

STP Model Account

Spread = 18 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 18 + 0 = 21

The Ideal way to trade the USD/CZK

The volatility in this currency pair is pretty high compared to major and minor currency pairs. And the costs are low by default for the exotic currency pairs. However, it is not ideal for this pair at any time.

The main focus of exotic currencies is to trade when the volatility is not too high. Hence, trading when the volatility is around average and maximum values in the volatility table will ensure decent volatility with lower costs as well.

Another simple technique to reduce costs is by placing limit/stop orders instead of executing by the market. In doing so, the slippage will be taken away from the total costs, which will, in turn, reduce the total cost of the trade.