Categories

## Trading The NZD/HKD Forex Exotic Currency Pair

#### Introduction

NZD represents the official currency of New Zealand, while HKD is the official currency of Hong Kong. It is an exotic-cross currency pair where NZD is the base currency, and HKD the quote currency. The price of NZDHKD determines the value of HKD, which is equivalent to one NZD. In other words, this pair represents 1 NZD per X HKD. For example, if the pair is trading at 5.14452, we would need about 5.1 HKD to purchase one NZD.

#### NZD/HKD Specification

To get the Spread value, we just have to subtract the Bid price from the Ask price. The value of the spread is set by a broker. However, the amount in pips depends on the type of execution model used for executing the trades.

#### Fees

Like other financial markets, Forex has some fees that a trader needs to pay while they take a trade. Note that the broker does not take any fee on STP accounts, but a few fees are charged on ECN model accounts.

#### Slippage

The slippage is a set of pips formed by the difference between the demanded price by the trader and the execution price by the broker. The main reason for the occurrence of slippage is market volatility or the broker’s execution speed.

#### Procedure to assess Pip Ranges

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
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/HKD Cost as a Percent of the Trading Range

The volatility values from the above table show how the cost varies with the change in volatility. The ratio between total cost and the volatility values reconverted into percentages to have a better outlook.

#### ECN Model Account

Spread = 31 | Slippage = 5 | Trading fee = 8

= 31 + 5 + 8

Total cost = 44

#### STP Model Account

Spread = 35 | Slippage = 1 | Trading fee = 0

= 35 + 1 + 0 = 36

#### The Ideal way to trade the NZD/HKD

The NZDHKD is a pair with high liquidity. Therefore, trading this exotic currency pair seems to be feasible. We can see from the above table that the highest Percentage of values are barely above 100%. It means this currency pair is relatively less expensive to trade.

The most significant costs are in the hourly timeframe only, as the costs in 2H, 4H, and daily timeframes are also low. However, every trader should avoid the volatile market condition. Therefore, the best way to trade this pair is to look out for the possibilities to be on lower timeframes also while sticking to the average volatile level.

Also, traders can reduce the trading costs further by eliminating market orders and placing orders as ‘limit’ and ‘stop.’ In this case, slippage can completely be avoided. Please go through the below table to further understand this.

#### STP Model Account (Using Limit Orders)

Spread = 31 | Slippage = 0 | Trading fee = 0

= 31 + 0 + 0 = 31

Categories

## 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.

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.

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

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
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

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!

Categories

## Exploring The GBP/HKD Forex Exotic Currency Pair

#### Introduction

GBP Pound sterling, also known as the pound, is the official currency of the United Kingdom and many others. It is one of the oldest currencies and is further divided into pence. Where in HKD is known as Hong Kong Dollar, and it is the official currency of Hong Kong. One HKD is divided into 100 cents.

GBP/HKD is the abbreviation for the Pound sterling against the Hong Kong Dollar. Here, the first currency (GBP) is the base, and the second currency (HKD) is the quote currency. It is classified as an exotic-cross currency pair.

#### Understanding GBP/HKD

In Forex, to find out the relative value of one currency, we need another money to compare. The market value of GBP/HKD determines the strength of HKD against the GBP, i.e., It can simply be understood as 1GBP is equal to how much HKD, so if the exchange rate for the pair GBPHKD is 9.254. It means that we need 9.254 HKD to buy 1 GBP. If the value of the base currency goes down, the value of the quote currency goes up and vice versa.

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. The spread is how brokers make their money. For this currency pair, the spread values for ECN & STP brokers are as follows.

ECN: 33 pips | STP: 36 pips

#### Fees

A Fee is simply the commission we pay to the broker on each position we open. 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 it mostly happens when market orders are placed during high volatile conditions. It may also occur when large orders are placed at a time.

The amount of money we win or lose in a given amount of time can be assessed using the trading range table. The following table is a representation of the minimum, average, and maximum pip movement in a currency pair. This can be assessed very easily by using the Average True Range (ATR) indicator combined with 200-period SMA.

#### Procedure to assess Pip Ranges

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
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/SGDCost as a Percent of the Trading Range

The cost of trade 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 coming sections.

#### ECN Model Account

Total cost = Slippage + Spread + Trading Fee = 3 + 15 + 5 = 41

#### STP Model Account

Spread = 36 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 19 + 0 = 39

#### Trading the GBP/HKD Currency Pair

The GBPHKD is an exotic-cross currency pair and is a normal ranging market. For instance, the average pip movement on the 1H timeframe is only 49 pips. 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.

Also, the larger/smaller the percentages, the higher/lower are the costs on the trade. So, we can infer that the costs are higher for low volatile markets and high for highly volatile markets. To reduce our risk, 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 your priority is towards reducing costs, you may trade when the volatility of the market is around the maximum values.

When orders are executed as market orders, there is slippage on the trade. But, with limit orders, there is no slippage as such. Only trading fees and the spread will be taken into consideration to calculate the total costs. This method will bring down the cost significantly.

Categories

## Asset Analysis – EUR/HKD Exotic Currency Pair

#### Introduction

EUR/HKD is the abbreviation for the Euro area’s euro against the Hong Kong dollar. It is classified as an exotic currency pair that usually has high volatility and low trading volume. Here, the EUR is the base currency, and the HKD is the quote currency.

#### Understanding EUR/HKD

The current value of the pair represents the value of HKD that is equivalent to one USD. It is quoted as 1 EUR per X HKD. For example, if the value of this pair is 9.8764, then these many units of HKD are required to buy one US dollar.

In trading, the difference between the bid price and the ask price is referred to as the spread. Spread typically varies from broker to broker. The approximate spread on ECN and STP accounts is given below.

ECN: 17 pips | STP: 18 pips

#### Fees

The fee is the commission you pay to your broker for each position you open. The value of this, too, is in the hands of the broker. However, note that there are no fee STP accounts.

#### Slippage

Slippage is the difference between the price at which the trader executed the trade and the price he actually received from the broker. Essentially, slippage depends on two factors:

• Broker’s execution speed
• Market’s volatility

Knowing how much profit you can make or how much loss you can incur in a trade in a specific time frame is vital. The Trading Range can be assessed using the table given below. It represents the minimum, average, and maximum pip movement in EURHKD in different timeframes.

#### Procedure to assess Pip Ranges

2. Set the period to 1
3. Add a 200-period SMA to this indicator
4. Shrink the chart so you can determine a large period
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/HKD Cost as a Percent of the Trading Range

Total cost is not constant for every trade you take. It varies based on the volatility of the market. And the variation of it can be obtained from the two tables given below.

#### ECN Model Account

Total cost = Slippage + Spread + Trading Fee = 3 + 17 + 3 = 23

#### 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 EUR/HKD

Exotic currency pairs tend to have high volatility and low volume. And it is not ideal to trade during these times. So, let us find out the best times of the day to trade this currency pair by comprehending the above tables.

The higher percentages depict higher costs on the trade. It can be ascertained that the percentages are on the upper side in the min column. Hence, we can conclude that the costs are high when the volatility of the market is high and vice versa.

And, when it comes to determining the right time to enter the market, one may open positions when the volatility of the market is around the average volatility. This method will ensure both decent volatility and low costs.

Market orders result in slippage, and limit orders do not. Hence, placing limit orders is another way through which one can considerably reduce their total costs on the trade.

Categories

## Understanding The USD/HKD Exotic Forex Pair

#### introduction

USDHKD is the abbreviation for the US dollar and the Hong Kong dollar. The USDHKD is an exotic currency pair. Exotics are pairs that are thinly traded in the foreign exchange markets and are not widely used in the global markets. One can expect high volatility and low volumes on this pair. Here, USD is referred to as base currency and HKD as the quote currency.

#### Understanding USD/HKD

The value of USDHKD represents the value of the Hong Kong dollar that is equivalent to one US dollar. It is quoted as 1USD per X HKD. For example, if the market price of USDHKD is 7.7684, then these many units of HKD are required to purchase one USD.

Spread is the difference between the bid price and the ask price of a currency pair. This value is set by the brokers, and it varies from different brokers. The type of execution model brings a variation in the spreads.

ECN: 5 | STP: 9

#### Fees

When you execute any trade through your brokers, there is a fee that has to be paid. The fee differs from brokers to brokers, as well as their execution type. Typically, there is no fee on STP accounts.

#### Slippage

Slippage is the difference between the trader’s intended price to execute a trade and the price he actually received from the broker. There is always this difference due to the volatility of the market and the broker’s execution speed. As a matter of fact, slippage is pretty high on exotic pairs.

The trading range is the depiction of the minimum, average, and maximum pip movement of a currency pair. And these values help in assessing one’s risk on a trade. By finding the product of the volatility value with the pip valueyou can determine the profit or loss that can be incurred in a specified timeframe.

#### Procedure to assess Pip Ranges

2. Set the period to 1
3. Add a 200-period SMA to this indicator
4. Shrink the chart so you can determine a large time period
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/HKD Cost as a Percent of the Trading Range

This calculation is an extremely helpful tool to analyze the cost variations in a trade. This table is basically a representation of the total cost variations in different timeframes and volatilities of the market. The costs are represented as a percentage of the range, and the magnitude of it depicts the cost of the trade.

#### ECN Model Account

Total cost = Slippage + Spread + Trading Fee = 5 + 5 + 1 = 11

#### STP Model Account

Spread = 9 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 9 + 5 + 0 = 14

#### The Ideal way to trade the USD/HKD

Exotic pairs are expensive to trade when compared to major and minor currency pairs. However, it does not mean that one must completely avoid it. There are a few ways by which one can minimize the costs on the trade and take positions on it.

The higher the magnitude of the percentage, the higher is the cost of the trade. It is evident that the values are significant on the min column and comparatively small on the max column. Hence, costs are high for low volatilities markets and vice versa.

When it comes to picking the right time to enter the market, it is ideal to take positions when the volatility of the market is around the average values. From this, one can be guaranteed with affordable costs and decent volatility.

Slippage has a significant weight on the total cost of a trade. However, slippage can be wiped out. Trading using limit orders instead of market orders will take away the slippage on the trade. The next table displays the costs using limit orders.