peso – Forex Academy

Introduction

In this exotic forex pair, the AUD is the Australian Dollar, and the PHP is the Philippine Peso. Note that trading with such exotic pairs is accompanied by periods of high volatility compared to major forex pairs. The AUD is the base currency, while the PHP is the quote currency. Therefore, in forex trading, the price of the AUD/PHP represents the amount of PHP you can purchase using 1AUD. Say that the price of AUD/PHP is 34.057. It means that with 1 AUD, you can buy 34.057 PHP.

AUD/PHP Specification

Spread

In the forex market, when going long, you buy a currency pair from the broker at a “bid” price. When you go short, you sell the currency pair to the broker at the “ask” price. The difference between the two prices is the spread.

The spread for the AUD/PHP pair is – ECN: 10 pips | STP: 15 pips

Fees

Forex traders using ECN type accounts get charged a trading fee by their brokers depending on the size of their position. STP type accounts rarely attract any trading fees from the brokers.

Slippage

If you have ever opened a trade during periods of increased volatility, you will notice that your order price differs from the execution price. This difference is slippage. It can also be caused when your broker is slow to execute your order.

Trading Range in the AUD/PHP Pair

The trading range refers to the analysis of the fluctuation of a currency pair over various timeframes. With the trading range, we can determine volatilities from minimum to the maximum across all timeframes. This information will be useful in deciding profitability across these timeframes.

The Procedure to assess Pip Ranges

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

AUD/PHP Cost as a Percentage of the Trading Range

The percentage of the trading range is when we take the total costs associated with trading a particular pair and express it as a percentage of the volatility. Below are the percentage of the trading range for ECN and STP accounts.

ECN Model Account costs

Spread = 10 | Slippage = 2 | Trading fee = 1

Total cost = 13

STP Model Account

Spread = 15 | Slippage = 2 | Trading fee = 0

Total cost = 17

The Ideal Timeframe to Trade AUD/PHP Pair

We can observe from the above analyses that longer timeframes produce higher volatilities. More so, as the volatility increases, the trading costs decrease. Therefore, shorter-term traders of the AUD/PHP pair experience higher trading costs than longer-term traders.

However, trading costs can be reduced if traders were to open their positions when the volatility is approaching the maximum. Notice that across all timeframes, the trading costs are lower when volatility changes towards the maximum. Furthermore, using forex limit order types can be used to lower trading costs. Such order types eliminate the slippage costs. Here’s a demonstration.

ECN Account Using Limit Model Account

Total cost = Slippage + Spread + Trading fee

= 0 + 10 + 1 = 11

By getting rid of the slippage costs, we have effectively lowered trading costs across all timeframes.

The smallest unit of the Argentinian Peso – Argentinian currency, is now at parity with one Satoshi (Sat) – the smallest unit of Bitcoin.

Argentina is the latest country to witness this, well, unfortunate level of a currency slump. Taking to Reddit, an Argentinian citizen with the username OneMoreJuan brought this to the world’s attention: “I am from Argentina, and the smallest unit of our currency has reached the value of 1 Satoshi (1 Sat). Every FIAT currency in history has failed. Buy Bitcoin.”

One Bitcoin has 100 million Sats. One Argentinian Peso (ARS) has 100 cents, which is now roughly equal to or less than 1 Sat. This illustrates the dramatic depths to which the currency has sunk.

A Chain of Problems Each Triggered by the Last

Several factors have triggered this unfortunate turn of events for the currency. One is the central bank’s overzealous response to the economic crisis exacerbated by the current Corona pandemic. The bank has resorted to printing more money to meet shortages, which in turn has caused too much money to flood the economy, causing massive inflation.

Another trigger is the government’s own policies, which include limits on currency conversions, stifling regulations for finance players, and high fees -factors that have rendered it even impossible for the Peso to be tradable with the US Dollar. Instead, the country is now using an unofficial rate – the ‘blue dollar.’ At the time of writing, the blue dollar is sitting at 119 ARS to the US Dollar.

Using this rate, the price of one Bitcoin in the unofficial market is roughly $1,050,000 ARS, while the official going price is $650,000. Thus, 0.01 ARS is equal to around 1 Sat.

Bad to Worse

The latest events are happening in the backdrop of a recession that began in 2018. Now, after the pandemic crisis, inflation has skyrocketed to 50% – a factor that’s also pushing more Argentinians to purchase Bitcoin.

A Pinch Felt by Many

Argentina isn’t the only country whose economy is fighting to stay above the water. The Lebanese Lira recently tumbled to new lows, with one Lira acquiring the value 1 Satoshi. The Vietnamese Dong had it even worse. One Dong has been less than the value of one-millionth of Bitcoin for a while now. Other national currencies whose value is below one Sat are the Sierra Leone Leone, Iranian Rial, the Lao Kip, and more.

With this ominous trend, what’s the future of other somewhat unstable currencies, especially with a global pandemic that’s shown no sign of abating? This remains to be seen.