Tag: EGP

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What Should You Know Before Trading The CAD/EGP Forex Exotic Pair

Introduction

Introduction

Introduction

The CAD/EGP is an exotic currency pair with the CAD representing the Canadian Dollar, and EGP – the Egyptian Pound. Forex trading in such an exotic currency pair is accompanied by higher volatility. The CAD is the base currency, while the EGP is the quote currency in this pair. Therefore, the price attached to this pair shows the amount of EGP that 1 CAD can buy. Let’s say that the price of CAD/EGP is 11.7692. This price means that for every 1 CAD, you can buy 11.7692 EGP.

Spread

In the forex market, the difference between the buying and selling prices of a currency pair is called the spread. The spread for CAD/EGP is: ECN: 3.7 pips | STP: 8.7 pips

Fees

There are no broker fees associated with the STP accounts. For the ECN account, however, the trading fee is determined by your broker.

Slippage

Slippage in forex is the difference between the price that a trader requests the broker to complete a trade and the price that the broker executes the trade. This difference is determined by the brokers’ speed of execution and market volatility.

Trading Range in the CAD/EGP Pair

Forex traders endeavor to know the average number of pips that a particular currency pair moves within a given timeframe. The trading range represents the volatility of a currency pair within a particular timeframe. The knowledge of a pair’s trading range makes for a useful risk management tool.

If, for example, during the 1-hour timeframe, the CAD/EGP pair has a trading range of 10 pips, then someone trading this pair can expect to gain or lose $8.5 within this period. Below is a table showing the minimum, average, and maximum volatility of CAD/EGP across different timeframes.

The 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 larger 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.

CAD/EGP Cost as a Percentage of the Trading Range

In the forex market, trading costs include brokers’ fees, slippage, and spread. i.e.

Total cost = Slippage + Spread + Trading Fee

Below are analyses of percentage costs (in pips) to be expected when trading the CAD/EGP pair using either the ECN or the STP account.

ECN Model Account

Spread = 3.7 | Slippage = 2 | Trading fee = 1

Total cost = 6.7

STP Model Account

Spread = 8.7 | Slippage = 2 | Trading fee = 0

Total cost = 10.7

The Ideal Timeframe to Trade CAD/EGP

As can be seen from the tables above, trading the 1-hour timeframe with either the ECN or the STP account carries the highest trading costs. We can deduce that during times of low volatility, the trading costs are higher. However, for short term traders, timing their trades when volatility is above average during the 1H, 2H, 4H, and the 1D timeframes ensure they incur lower trading costs with the CAD/EGP pair.

The higher timeframes provide the longer-term traders of the CAD/EGP pair lower trading costs. Forex traders can reduce the trading costs by using limit order types, which removes the risks of slippage. Here’s a demonstration of how this works in the ECN account.

Total cost = Slippage + Spread + Trading fee

= 0 + 3.7 + 1 =4.7

Notice that when the slippage cost is eliminated by using limit orders, the total costs are significantly reduced. The highest cost, for example, reduces from 113.56% to 79.66%.

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Forex Assets

Understanding The EUR/EGP Exotic Currency Pair

Introduction

Introduction

Introduction

The Euro Area’s euro against the Egyptian Pound is abbreviated as EUREGP. This is an exotic-cross currency pair in the forex market. In this pair, the EUR is the base currency, and the EGP is the quote currency.

Understanding EUR/EGP

The market price of the EUREGP depicts the value of EGP that is equivalent to one euro. It is simply quoted as 1 EUR per X EGP. So, for example, if the market price of this pair is 17.8341, then exactly 17.8341 Egyptian Pounds is required to purchase one Euro.

Spread

The difference between the bid price and the ask price is referred to as the spread. These two values are set by the brokers. Hence, it is different for different brokers. The spread also varies based on how the orders are executed.

ECN: 100 pips | STP: 111 pips

Fees

The fee is simply the commission paid on the trade. There is no fee on STP execution model but a few pips on the ECN execution model. However, the fee absence on STP accounts is usually compensated by higher spreads.

Slippage

Slippage is the difference between the price which was wanted by the trader and the price the broker actually gave the trader. It is typically not possible for brokers to give the exact price intended by the traders due to reasons:

  • Broker’s trade execution speed
  • Market volatility

Trading Range in EUR/EGP

Trading range is an illustration of the pip movement in a currency pair for different timeframes ranging from 1H to 1M. These volatility values help in assessing the risk involved in a trade. Basically, it acts as an effective risk management tool. Another application to it is discussed in the subsequent section.

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.

EUR/EGP Cost as a Percent of the Trading Range

This is a very helpful application of the trading range. In the cost as a percent of the trading range, we combine the volatility values with the total cost on the trade and observe how the cost varies for changing volatilities.

ECN Model Account

Spread = 100 | Slippage = 10 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 10 + 100 + 3 = 113

STP Model Account

Spread = 111 | Slippage = 10 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 111 + 0 = 114

Trading the EUR/EGP

The EUR/EGP is an exotic-cross currency pair. This pair is highly volatile, but the trading volume is pretty low. However, this pair can still be traded in certain situations.

Firstly, we can see that the spreads on this pair are high. This is because the volatility in this pair is very high. For example, the average pip movement in the 1H timeframe is over 400 pips. So, we can’t really say that the spread of this pair is high.

Consider the table representing the variation in the costs. We can see that the percentages are highest in the min column. And the values are considerably small in the average and max column. If we were to interpret this, the cost of the trade reduces as the volatility of the market increases. So, based on the type of trader you are, you can choose to enter the market. For example, if you’re concerned about the high costs, then you may trade when the volatility of the market is at its peak. If you’re a conservative trader who needs petty low volatility, then you may use it during low volatilities, but you’ll have to bear high costs for it.

Furthermore, there is a way through which you can bring down your existing cost on the trade. This is simply by executing trades using limit or stop orders instead of the market. In doing so, the slippage will be nullified. So, in our example, the total cost would reduce by ten pips.

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Forex Assets

Analyzing The USD/EGP Exotic Forex Currency Pair

Introduction

Introduction

Introduction

USDEGP is the abbreviation for the US Dollar against the Egyptian Pound. The USDEGP is classified under the emerging currency pairs, and the volatility in these pairs is quite high. In this pair, the US Dollar is the base currency and the EGP the quote currency.

Understanding USD/EGP

The price of USDEGP specifies the value of EGP equivalent to one USD. It is quoted as 1 USD per X EGP. So, if the market price of this pair is 15.673, then 15.673 units of EGP are required to purchase one US Dollar.

Spread

The difference between the bid and ask price is referred to as the spread. This value varies from broker to broker as well as how they execute the trade. The approximate spread on ECN and STP accounts is shown below.

ECN: 20 pips | STP: 21 pips

Fees

The fee is a commission that is to be paid to the broker for each trade you execute on an ECN account. On STP accounts, the fee is nil.

Slippage 

The price you receive from the broker is usually different from the price when you executed. And the difference between these two prices is referred to as the slippage. The factors affecting slippage include,

  • Market’s volatility
  • Broker’s execution speed

Trading Range in USD/EGP

The trading range is a tabular representation of the pip movement in a currency pair for different timeframes. With it, one can assess their risk on the trade for each 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 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/EGP Cost as a Percent of the Trading Range

As the name pretty much suggests, this is a trading range table that represents cost variations (in terms of percentage) for different timeframes and volatilities. These values are useful in determining the ideal times of the day to trade this pair.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 20 + 3 = 26

STP Model Account

Spread = 21 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 21 + 0 = 24

The Ideal way to trade the USD/EGP

In emerging currencies, the volatility is high, and the traded volume is low. So is it not ideal to enter the market any time during the day. So, let’s interpret the above tables and find the best times of the day to trade this currency pair.

The magnitude of the percentage is directly proportional to the cost of the trade. And since the percentage is higher in the min column, we can conclude that as the volatility increases, the cost reduces. However, our main aim is not only to reduce costs but to have good volatility and trading volume as well. Hence, to ensure both, it is ideal to trade when the volatility is at/above the average values in the volatility table.

Moreover, one can bring their costs slightly lower by trading using limit orders instead of market orders. This will cut off the slippage on the total cost of the trade. An example of the same is given below.