Tag: RUB

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Forex Assets

Costs Involved While Trading The AUD/RUB Forex Exotic Pair

Introduction

Introduction

Introduction

AUD is the Australian Dollar, and RUB is the Russian Ruble; AUD/RUB is thus an exotic currency pair. When trading this pair, forex traders should expect relatively high volatility due to its exotic nature.

In this pair, the AUD is the base currency, and the RUB is the quote currency. It means that the AUD/RUB pair’s price represents the amount of Russian Ruble that one Australian Dollar. If the AUD/RUB price is 55.813, it means that you can buy 55.813 Russian Rubles using 1 Australian Dollar.

AUD/RUB Specification

Spread

For the AUD/RUB pair, the spread is the difference between the price at which you can buy the pair from a broker and the price at which you can sell it to the broker.

The spread for the AUD/RUB pair is:

ECN: 10 pips | STP: 15 pips

Fees

If you have an ECN account, different brokers will charge you varying fees per trade, depending on the size of your position. For most STP accounts, however, there are no fees levied whenever you open a position.

Slippage

In the forex market, slippage occurs when you open a position, but it is executed at a price different than the one you requested. The primary determinants of slippage are market volatility and your broker’s speed of execution.

Trading Range in the AUD/RUB Pair

Throughout the day, the price of a currency pair fluctuates. This fluctuation, as observed from different timeframes, is known as the trading range. In forex, the trading range can help a trader determine the volatility of a currency pair, hence assess the risks it carries.

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.

AUD/RUB Cost as a Percentage of the Trading Range

We can combine volatility, slippage, and trading fees to determine the cost of trading a currency pair across different timeframes.

Below are cost percentages for both the ECN and the STP forex accounts. These percentages are in terms of pips.

ECN Model Account

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 the AUD/RUB

In the analyses above, we notice that lower timeframes have low volatility, accompanied by higher trading costs for the AUD/RUB pair. With either the ECN or the STP account, costs are highest when volatility is at the lowest, 3.1 pips. The lowest costs are incurred when volatility is the highest at 802.2 pips.

We can observe that longer-term traders generally enjoy lower trading costs. However, shorter-term traders can reduce their trading costs by trading the AUD/RUB pair when volatility is above average; since costs are lower.

If traders use pending orders, they can eliminate slippage, which lowers the trading costs. Here’s an example with the ECN account.

Total cost = Slippage + Spread + Trading fee

= 0 + 10 + 1 = 11

You can notice that there is a significant reduction in trading costs. For example, the highest trading cost for the ECN account has reduced from 220.34% to 186.44%.

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Forex Assets

Everything About The EUR/RUB Forex Asset

Introduction

Introduction

Introduction

The EUR/RUB is the abbreviation of the Euro Area’s Euro against the Russian Ruble. This is an exotic-cross currency pair. The volatility and volume in this pair are good enough for traders to day trade this currency. Here, the EUR is the base currency, and the RUB is the quote currency.

Understanding EUR/RUB

The price in the exchange market of the EUR/RUB specifies the value of RUB that is needed to purchase one Euro. It is quoted as 1 EUR per X RUB. For example, if the value of EUR/RUB is 85.769, this much of Rubles are required to buy one Euro.

Spread

The price of buying is not the same as the price for selling. One must pay the ask price for buying and bid price for selling. And the difference between the bid price and the ask price is called the spread. This value varies based on the type of execution model used by the broker.

ECN: 42 pips | STP: 44 pips

Fees

Like in the stock market where you pay commission on both sides of your trade, in the forex market as well, you must pay few pips of fee for your trade. This could be between 5-10 pips. Note that the fee on STP accounts is nil.

Slippage

Due to the volatility in the market and the broker’s execution speed, there is a difference in the price at which you execute the trade and price, which is actually given by the broker. This is known as slippage.

Trading Range in EUR/RUB

The depiction of the minimum, average, and maximum volatility in the market for different timeframes is given in the below table. These values help us in assessing the risk of trade for a specified time frame.

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/RUB Cost as a Percent of the Trading Range

The cost of trade changes as the volatility of the market also changes. In the below tables, we have illustrated the cost variation in the trade-in different timeframes and volatilities for both ECN and STP model account.

ECN Model Account

Spread = 42 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 42 + 3 = 48

STP Model Account

Spread = 44 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 44 + 0 = 47

Trading the EUR/RUB

The EUR/RUB is one of the most traded exotic-cross currency pairs. The volatility in this pair is pretty high. However, a retail trader can still trade it.

Consider the above two volatility tables. We can see that the values are large in the min column and small in the max column. This means that the costs are more when the volatility is low, and less when the volatility is high.

Traders looking to trade with low cost can consider trading when the volatility is high. And traders who need low volatility will have to bear higher costs. There are traders who look for a balance between the two. Such traders can trade when the volatility of the market is around the average values. This will ensure enough volatility as well as low costs.

Another simple way to reduce cost is by placing orders using limit and stop instead of the market. This will take away the slippage on the trade. Hence, this will reduce the total cost of the trade. So, in our example, the total cost will reduce by three pips.

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Forex Assets

Learning The Costs Involved While Trading The USD/RUB Pair

Introduction

Introduction

Introduction

USD/RUB is the tick symbol for the US Dollar against the Russian Ruble. This emerging currency pair has high volatility and usually low volume. Here, the US Dollar is the base currency, and the RUB is the quote currency.

Understanding USD/RUB

The price of this pair determines the value of RUB that’s equivalent to one US Dollar. It is quoted as 1 USD per X RUB. For example, if the market price of this pair was 68.69, then these many Rubles are required to purchase one US Dollar.

Spread

It is the difference between the bid price and ask price in the exchange market. This value is set by the brokers and varies from each other. Also, it varies on the type of execution model.

ECN: 21 pips | STP: 23 pips

Fees

This fee is levied by stockbrokers as well. The fee on ECN and STP account is given below.

ECN: 3-10 pips | STP: 0 pips

Slippage

The difference between the investor’s intended price and the real price executed by the broker is called slippage. Slippage happens solely due to the changes in the market’s volatility and speed with which the broker executes a trade.

Trading Range in USD/RUB

The trading range is a tabular illustration of the minimum, average, and maximum volatility in a currency pair for a given timeframe. Using these values, traders can quickly assess their risk on the trade for any of the given timeframes.

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 substantial 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/RUB Cost as a Percent of the Trading Range

Total cost is the sum of the slippage, spread, and the trading fee. This varies based on the volatility of the market. And below is a table that represents the cost variation for different volatilities.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 21 + 3 = 27

STP Model Account

Spread = 23 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 23 + 0 = 26

The Ideal way to trade the USD/RUB

Note that, the larger the value of the percentages, the higher is the cost on the trade and vice versa. The table clearly says the costs are high for low volatilities as the magnitudes of costs are high in the min column. But, it is not really ideal to trade in these extreme regions. To ensure decent volatility with comparatively low costs, it is ideal to trade this pair when the Volatility is around the average value in the trading range table.

We can see that slippage is a pretty heavy variable in the total costs. However, it can be nullified simply by placing orders using limit/stop orders rather than market orders. The drop in the total costs on the trade is represented in the below table as follows.

We can see, also that there are substantial costs when trading the USDRUB pair, even ion a daily timframe. That means that you will need to be right on direction and extension of the movement to be profitable, because, on an average trading range it would require about 12 hours of positive price movement to cover the trading costs. Therefore it is recommended to trade this exotic pair on swings of more than a week, to reduce the percent of the movement that is absorbed by the trade cost.