Singapore Dollar – Forex Academy

Introduction To GBP & SGD Pairs

GBP

Great Britain Pound is also known in some contexts as the pound or sterling. It is the official currency of the United Kingdom and many British overseas territories. It is subdivided into 100 pence. The Pound Sterling is the oldest currency in continuous use, and also the fourth most-traded currency in the Forex market, after the United States dollar, the euro, and the Japanese yen.

SGD

The Singapore dollar is Singapore’s official currency, and it is divided into 100 cents. This currency is the thirteenth most traded currency in the world by value.

GBPSGD is the abbreviation for the Pound sterling against the Singapore Dollar. It is classified as an exotic-cross currency pair. In this currency pair, the GBP is the base currency, and the SGD is the quote currency.

Understanding GBP/SGD

In Forex, in order to find out the relative value of one currency, we need another currency to compare. It shows how much the GBP (the base currency) is worth as measured against the SGD (quote currency). It can simply be understood as 1GBP is equal to how much SGD. So if the exchange rate for the pair GBPSGD is 1.6894. It means that one GBP costs 1.6894 SGD.

Spread

The spread is the difference between the Bid (Sell) price and the Ask (Buy) price of an asset. The spread is how brokers make their money. Some broker Instead of charging a fee for performing a trade, the cost is built as a difference between the buy and sell prices of the currency pair.

ECN: 15 pips | STP: 19 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 is the difference between the price at which the trader wants to execute the trade and the price at which the trade is effectively executed. Slippage can occur at any time but is mostly happens when the market is very Volatile.

Trading Range in GBP/SGD

The amount of money we will win or lose in a given amount of time can be assessed using the trading range table. This is a representation of the minimum, average, and maximum pip movement in a currency pair.

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 assess a large time 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.

GBP/SGD Cost 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

Spread = 15 | Slippage = 3 | Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 15 + 5 = 23

STP Model Account

Spread = 19 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 19 + 0 = 22

Trading the GBP/SGD currency pair

The GBPSGD is an exotic-cross currency pair and is a normal ranging market. For instance, the average pip movement on the 1H timeframe is only 62 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 the 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 you’re priority is towards reducing costs, you may trade when the volatility of the market is around the maximum values.

Also, we can take advantage of the Limit orders to reduce costs. When orders are executed as market orders, the risk of slippage always persists. But, with the help of limit orders, we can completely avoid slippage, thereby reducing the overall trading cost. When slippage is Zero, only trading fees and the spread will be taken into consideration to calculate the total costs. Hence, it brings down the cost significantly.

Introduction

EUR/SGD is the abbreviation for the Euro area’s euro against the Singapore Dollar. This is one of the most traded exotic currency pairs in the world. In this pair, EUR is the base currency, and SGD is the quote currency.

Understanding EUR/SGD

The price of this pair represents the value of SGD, which is equal to one EUR. It is quoted as 1 EUR per X SGD. For example, if the value of this pair is 1.5552, then about 1.5 Singapore Dollars are required to purchase one euro.

EUR/SGD Specification

Spread

The spread is the difference between the bid and the ask price in the market. These two prices are set by the brokers. And it depends on the type of execution model used by the brokers.

Spread on ECN: 10 pips | Spread on STP: 11 pips

Fees

On ECN accounts, for every position you open, there is some fee involved with it. This is different for different brokers. However, on STP accounts, there is no fee as such.

Slippage

To put it in simple words, slippage is the difference between the trader’s demanded price and price given by the broker. The trader does not get his intended price due to two reasons – Broker’s execution speed & Market volatility

Trading Range in EUR/SGD

With the trading range table, we can assess our gain/loss on a trade in a given timeframe even before we open positions for it. This is done by considering the past volatility of the market.

Now, to determine the profit/loss on a trade, all you must do is, multiply the volatility value with the pip value ($7.25).

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 assess a large time 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.

EUR/SGD Cost as a Percent of the Trading Range

This is an excellent application to the above volatility table. By considering the pip movement values, we can determine the cost variation of a trade as well. To do so, we find the ratio between the total cost and volatility value and convert it into percentages. Below are the cost variations for ECN and STP accounts models.

ECN Model Account

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

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

Total cost = 16

STP Model Account

Spread = 11 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 11 + 0

Total cost = 14

The Ideal way to trade the EUR/SGD

Comprehending the costs : Large/Small percentage -> High/Low costs

From the above the tables and the implications, we can conclude that costs are high when the volatility of the low and high when the volatility is low. And when it comes to the ideal way to trade this pair, conservative traders may trade it during those times when the volatility values are at or above the average values. This will ensure enough volatility as well as affordable costs. And other aggressive traders may trade during any of the extremes.

Also, traders can reduce their total costs by trading using limit orders and stop orders. Unlike the market orders, limit and stop orders do not include slippage on the trade. Hence, this will reduce costs considerably.