Tag: spread

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Forex Assets

Trading The JPY/HUF Forex Exotic Currency Pair

Introduction

Introduction

Introduction

In the JPY/HUF currency pair, JPY represents the currency of Japan. On the other hand, HUF is the Hungarian Forint. This currency pair represents the value of Hungarian Forints (quote currency) per Yen (base currency). This pair can be represented as 1 JPY per X HUF. For example, if the value of this currency pair is at 2.91 (CMP), then about 2.9 HUF is required to purchase one JPY.

JPY/HUF Specification

Spread

If we want to determine the spread, we should subtract the Bid price and the Ask price. Spread is a trading charge that the broker takes as soon as we open a trade. This value changes with the change of the execution model.

Spread on ECN: 13 pips | Spread on STP: 18 pips

Fees

Every broker takes a trading fee from a trader. The process of taking the fee is almost the same as every broker in the world. Note that the fee is only applicable to ECN accounts.

Slippage

Slippage happens when the execution price and open trade price are not the same. The volatility and the broker’s execution speed are the main cause of slippage.

Trading Range in JPYHUF

The trading range is the representation of the minimum, average, and maximum volatility of this pair on the 1H, 4H, 1D, 1W, and 1M timeframe. Using these values, we can assess our profit/loss margin of trade. Hence, this proves to be a helpful risk management tool for all types of traders.

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.

JPYHUF Cost as a Percent of the Trading Range

With the volatility values from the above table, we can determine the chance of cost with the change of volatility. We have got the ratio between total cost and the volatility values and converted them into percentages.

ECN Model Account 

Spread = 13 | Slippage = 5 | Trading fee = 8

Total cost = Spread + Slippage + Trading Fee

= 13 + 5 + 8

Total cost = 26

STP Model Account

Spread = 18 | Slippage = 5 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee

= 18 + 5 + 0

Total cost = 23 

The Ideal way to trade the JPYHUF

As per the above data, we can say that JPYHUF is not an extremely volatile pair. Therefore, traders from every level can trade with it and make money. The average cost per trade in the H1 timeframe is at 41.86%, which decreases to almost 1% in a monthly timeframe. As a trader, it is often hard to trade in a timeframe like weekly or monthly, as it is very time-consuming. Therefore, sticking to the hourly to daily timeframe is recommended for traders to minimize the trading cost.

Another way to reduce the cost is to place orders as ‘limit’ and ‘stop’ instead of ‘market’ orders. In limit orders, slippage will not be in the calculation of the total costs. Therefore, in the below example, the total cost will be reduced by five pips.

Limit Model Account (STP Model Account)

Spread = 18 | Slippage = 0 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee

= 18 + 0 + 0

Total cost = 18

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Forex Assets

Analysing The Costs Involved While Trading The AUD/MXN Exotic Pair

Introduction

Introduction

Introduction

In this exotic forex pair, the AUD represents the Australian dollar, while the MXN – the Mexican Peso. Exotic currency pairs have higher volatility in the forex market when compared to the other major pairs. Here, AUD is the base currency, where MXN is the quote currency. It means that the AUD/MXN exchange rate shows the amount that 1 AUD can buy in terms of MXN. Let’s say that the exchange rate for the AUD/MXN is 15.0346; it means that 1 AUD can be exchanged for 15.0346 MXN.

AUD/HUF Specification

Spread

When you go long in the forex market, you buy the currency pair from your broker at a higher price than when you sell it. The spread in forex is the difference between these two. The spread for the AUD/MXN pair is – ECN: 2 pips | STP: 7 pips

Fees

Some forex brokers charge a commission for every trade on ECN type accounts, depending on the value of the trade. STP accounts do not incur any trading fees.

Slippage

Sometimes when you place a market order, your broker will fill it in with a different price. This is slippage in forex trading; it is caused by increased volatility and the speed at which your broker executes the trade.

Trading Range in the AUD/MXN Pair

The trading range analyzes the spread between the highest and the lowest price movements across multiple timeframes. The trading range analysis ranges from the minimum, average, to the maximum volatility across all timeframes. It is used to assess the potential profitability of a currency pair across all 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.

AUD/MXN Cost as a Percentage of the Trading Range

Further analysis of profitability can be aided by analyzing the percentage of the total cost to the volatility. These costs are put in terms of percentages of the volatility on all timeframes.

ECN Model Account costs

Spread = 2 | Slippage = 2 | Trading fee = 1 | Total cost = 5

STP Model Account

Spread = 7 | Slippage = 2 | Trading fee = 0 | Total cost = 9

The Ideal Timeframe to Trade  AUD/MXN Pair

For the AUD/MXN pair, the ideal trading timeframe appears to be the longer timeframes since trading costs are at their lowest here. We notice that the trading costs for the AUD/MXN pair decrease as the timeframes become longer. Also, note that at longer timeframes, the volatility is higher.

For traders wishing to trade the AUD/MXN pair for the shorter-term, timing their trades with when the volatility increases towards the maximum can help. More so, adopting the use of forex limit orders will lower the trading costs by ensuring there are no slippages.

ECN Account Using Limit Model Account

Total cost = Slippage + Spread + Trading fee = 0 + 2 + 1 = 3

Notice how using the forex limit order types reduces the overall trading costs across all timeframes. The maximum trading cost of the AUD/MXN pair, for instance, decreased from 84.75% of the trading range to 50.85%.

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Forex Assets

Trading The AUD/TRY Forex Exotic Currency Pair and Analysing The Costs Involved

Introduction

Introduction

Introduction

AUD/TRY is an exotic currency pair in the forex market. The AUD is the short form of the Australian Dollar and the TRY for Turkish Lira. Forex traders interested in such exotic pairs should be aware that trading them comes with high volatility compared to trading major forex pairs. In this exotic currency pair, the AUD is the base currency, while the TRY is the quote currency. Thus, the AUD/TRY price represents the amount of TRY that 1 AUD can buy. For instance, if the AUD/TRY pair’s price is 5.8362, it means that 1 AUD can buy 5.8362 TRY.

AUD/TRY Specification

Spread

In the forex market, your broker sells a currency pair to you at a higher price and buys it from you at a lower price. The value difference between these two prices is the spread. It is the primary way in which forex brokers earn their revenue.

The spread for the AUD/TRY pair is – ECN: 3 pips | STP: 8 pips

Fees

Forex traders with ECN account normally pay a trading fee to their broker whenever they open a position. This commission depends on the size of the trade, and not all forex brokers levy it. STP accounts do not have commissions.

Slippage

In forex trading, slippage refers to the price you expect your market order to be filled at and the price at which it is executed. The difference is a result of delays by your forex broker or high volatility.

Trading Range in the AUD/TRY Pair

The trading range refers to the analysis of the price fluctuation of a currency pair across various timeframes. The trading range shows the volatility in pips for a currency pair throughout the trading period ranging from minimum to maximum.

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/TRY Cost as a Percentage of the Trading Range

After determining the trading range, we can then determine the trading costs associated with these trading ranges. The total trading cost is expressed as a percentage of the pip volatility. Here are the trading costs for the AUD/TRY pair on both ECN and STP accounts.

ECN Model Account costs

Spread = 3 | Slippage = 2 | Trading fee = 1

Total cost = 6

STP Model Account

Spread = 8 | Slippage = 2 | Trading fee = 0

Total cost = 10

The Ideal Timeframe to Trade  AUD/TRY Pair

From these analyses, we have established that longer timeframes have lower trading costs while the shorter timeframes attract higher trading costs. Note that the highest trading costs coincide with periods of lower volatility.

Therefore, the ideal timeframe to trade the AUD/TRY pair would be on longer timeframes when volatility is the highest. For shorter-term traders, opening positions when volatility is above the average can potentially lower the trading costs. Furthermore, traders across all timeframes can lower their trading costs by using the forex limit order types. With these types of orders, the cost of slippage is removed.

Below is an example using the ECN account.

ECN Account Using Limit Model Account

Total cost = Slippage + Spread + Trading fee

= 0 + 3 + 1 = 4

Using the forex limit order types has lowered the trading costs across all timeframes. You can notice that the highest cost has reduced from 101.69% to 67.8%.

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Forex Assets

Exploring The Costs Involved While Trading The AUD/HUF Forex Exotic Pair

Introduction

Introduction

Introduction

The AUD/HUF pair is an exotic forex pair with the AUD representing the Australian Dollar and the HUF representing the Hungarian Forint. When trading in such an exotic currency pair, forex traders should anticipate higher volatility. The base currency in this pair is the AUD, while the HUF is the quote currency. Hence, the exchange rate of the AUD/HUF represents the amount of HUF that a single AUD can purchase. If the exchange rate of AUD/HUF is 221.51, it means that you can buy 221.51 HUF using 1 AUD.

AUD/HUF Specification

Spread

One of the ways forex brokers earn their revenue is through the spread. This is the difference in value between the price they sell a currency pair to you and the price at which they buy the same pair from you.

The spread for the AUD/HUF pair is – ECN: 22 pips | STP: 27 pips

Fees

For traders with the ECN account, they get charged a fee for opening positions. Note that not all brokers charge this commission. Forex brokers do not charge a fee on STP accounts.

Slippage

Every forex broker has different execution speeds. In times of high volatility, your order may be executed at a price other than the one you requested. This difference is slippage.

Trading Range in the AUD/HUF Pair

The trading range in forex trading is used to analyse the fluctuation in the price of a currency pair across multiple timeframes. The volatility, as measured with the trading range, is pips from the minimum, average, to the maximum for all timeframes. With this information, you can deduce the most profitable timeframes to trade.

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/HUF Cost as a Percentage of the Trading Range

Now that we’ve established the volatility,  we can proceed to calculate the trading costs incurred when trading these timeframes. The trading cost is expressed as a percentage of total costs to the volatility.

Below are the trading costs of the AUD/HUF pair for both ECN and STP accounts.

ECN Model Account costs

Spread = 22 | Slippage = 2 | Trading fee = 1

Total cost = 25

STP Model Account

Spread = 27 | Slippage = 2 | Trading fee = 0

Total cost = 29

The Ideal Timeframe to Trade  AUD/HUF Pair

From the above analyses, we can see that the trading cost of the AUD/HUF pair decreases with an increase in volatility. Since the volatility also increases with the timeframe, trading the AUD/HUF over longer timeframes incurs lower costs.

Although the lower timeframes have higher trading costs, these costs can be reduced by timing trades when volatility approaches the maximum. Furthermore, slippage costs can be avoided if traders use forex limit order types. With the forex limit orders, trades are executed at precise price points, avoiding the impact of slippage. Let’s look at an example of this using the ECN account.

ECN Account Using Limit Model Account

Total cost = Slippage + Spread + Trading fee

= 0 + 22 + 1 = 23

Notice that the trading costs have been reduced in all timeframes. For example, the highest cost has been lowered from 423.73% to 389.83%.

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Forex Assets

Trading The AUD/INR Forex Exotic Pair & Analysing The Costs Involved

Introduction

Introduction

Introduction

AUD/INR is an exotic currency pair in the forex market, with the AUD representing the Australian Dollar and the INR representing the Indian Rupee. Here, the AUD is the base currency, and the INR is the quote currency. That means that the AUD/INR price represents the amount of INR which 1AUD can buy. For example, let’s say that the price of the AUD/INR is 52.2654. It means that 1 AUD can buy 52.2654 INR.

AUD/INR Specification

Spread

When you go long in forex trading, you have to buy the currency pair from your forex broker. Now, if you decide to sell back the pair to the broker, they will buy it at a lower price than they sold to you. The difference between these two prices – also known as “bid” and “ask” – is the spread.

The spread for the AUD/INR pair is:

ECN: 20 pips | STP: 25 pips

Fees

Some brokers charge a commission for positions opened using ECN accounts. They vary depending on the size of the trade. STP accounts are rarely charged any trading fees.

Slippage

Slippage in Forex is the difference between the execution price of a market order and the price at which that order was placed. The slippage comes about due to increased market volatility or inefficiency on the part of your broker.

Trading Range in the AUD/INR Pair

When a currency pair fluctuates, its volatility varies across different timeframes. The analysis of this volatility in different timeframes is done using the trading range. It can help the trader identify the most suitable timeframes for a particular currency pair.

The trading range is expressed in pips. It shows the value of pips you stand to gain or lose on various 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.

AUD/INR Cost as a Percentage of the Trading Range

Expressing the total trading costs of a currency pair as a percentage of the trading range helps to understand the trading costs that pair on multiple timeframes. It shows how the trading costs change with volatility.

Below are the trading costs for the AUD/INR  pair on ECN and STP accounts.

ECN Model Account Costs

Spread = 20 | Slippage = 2 | Trading fee = 1

Total cost = 23

STP Model Account

Spread = 25 | Slippage = 2 | Trading fee = 0

Total cost = 27

The Ideal Timeframe to Trade AUD/INR Pair

From the above analyses, we can observe that the lowest trading costs of the AUD/INR pair are on longer timeframes. The lowest trading costs for both the ECN and the STP accounts are when the AUD/INR volatility is at the highest – 518.3 pips. While the shorter timeframes have higher trading costs, intraday traders can take advantage of the maximum volatility periods during these timeframes.

Furthermore, traders can reduce the trading costs by implementing forex limit orders instead of market orders, which are prone to slippages. Here is an example of how the limit orders remove the slippage costs.

ECN Account Using Limit Model Account

Total cost = Slippage + Spread + Trading fee

= 0 + 20 + 1 = 21

You can notice that the forex limit orders lowers the overall costs by making the slippage cost 0. In this scenario, the highest trading cost has been reduced from 389.83% to 355.93%.

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Forex Assets

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

Analysing The CAD/HUF Forex Currency Pair & Determining The Costs Involved

Introduction

Introduction

Introduction

The CAD/HUF is an exotic currency pair where CAD represents the Canadian Dollar, and HUF – the Hungarian Forint. In this article, let’s understand some of the basic concepts you should familiarise with before trading the CAD/HUF pair.

For this currency pair, the CAD is the base currency and the HUF the quote currency. In this case, the price associated with the CAD/HUF pair shows the amount of HUF that 1 CAD can buy. For example, if the price of CAD/HUF is 232.97, it means that 1 CAD can buy 232.97 HUF.

Spread

Spread in the forex market is the difference between buying price, i.e. ‘bid’ and the selling price, i.e. ‘ask.’ The spread for the CAD/HUF is – ECN: 50 pips | STP: 55 pips

Fees

The trading fees you are charged depends on the type of forex account you have. STP accounts carry no trading fee, while for the ECN accounts, the trading fees are determined by your forex broker.

Slippage

In highly volatile trading sessions, sometimes the price at which you trade is different than the price at which that trade will be executed. This difference is called slippage and is usually determined by your broker’s speed of execution.

Trading Range in the CAD/HUF Pair

In the forex market, a currency pair will fluctuate differently across different timeframes. Trading range helps a forex trader analyze how a given pair moves (in terms of pips) over a given timeframe, which is an important risk management tool.

For example, let’s say that during a 1-hour timeframe, the CAD/HUF pair has a trading range of 10 pips. A forex trader trading this pair can expect to gain or lose $43 since the value of 1 pip is $4.3

The table below shows the minimum, average, and maximum volatility of CAD/HUF 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/HUF Cost as a Percentage of the Trading Range

Trading costs that can be expected in forex include slippage, spread, and brokers’ fees. Thus, Total cost = Slippage + Spread + Trading Fee.

Forex traders should learn how these costs change across different timeframes as the currency pair price fluctuates. The tables below show the percentage costs (in pips) that can be expected when trading the CAD/HUF pair.

ECN Model Account

Spread = 50 | Slippage = 2 | Trading fee = 1

Total cost = 53

STP Model Account

Spread = 55 | Slippage = 2 | Trading fee = 0

Total cost = 57

The Ideal Timeframe to Trade CAD/HUF

With both the ECN and the STP forex trading accounts, the 1-hour timeframes have the highest costs. Therefore, for short-term traders, using the timeframes with minimum volatilities increases the trading costs they will incur. For the 1H, 2H, 4H, and the 1D timeframes, you will incur lower trading costs by trading the CAD/HUF pair when the volatility is above average.

For both types of trading accounts, longer time frames, i.e., the weekly and the 1-month, offer lesser trading costs for the pair. It is worth noting that forex traders can minimize their costs by using limit order types, which eradicate the risks of slippage. Here’s an example with the ECN account.

Total cost = Slippage + Spread + Trading fee

= 0 + 50 + 1 =51

You can notice that when the cost associated with slippage is removed, the overall costs for trading the CAD/HUF pair significantly drops. The highest cost reduces from 898.31% to 864.41%.

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Forex Assets

Understanding The Costs Involved While Trading The CAD/ILS Forex Exotic Pair

Introduction

Introduction

Introduction

CAD/ILS is an exotic currency cross. Here, CAD is the Canadian Dollar, and ILS is the Israeli Shekel. The CAD is the base currency, and the ILS is the quote currency. Therefore, the price of the CAD/ILS pair represents the quantity of the ILS that  CAD can buy. If the price of the pair is 2.6004, it means that 1 CAD can buy 2.6004 ILS.

CAD/ILS Specification

Spread

The buying price and the selling price of a currency pair tend to be different in forex. The difference between these two prices is the spread. The spread for the CAD/ILS pair is: ECN: 22 pips | STP: 27 pips

Fees

Forex brokers charge a commission on every trade made with the ECN account. The commission varies depending on the broker and the type of trade. Trades on STP accounts do not attract a trading fee.

Slippage

It is rare for a trader to get the exact price they request for a trade. Usually, there is a difference between the price requested and the execution price. This difference is the slippage, and it depends on market volatility and the speed of trade execution.

Trading Range in the CAD/ILS Pair

The trading range is the analysis of how currency fluctuates across different timeframes in terms of pips. The trading range is used to analyze a currency pair’s volatility and expected profit. For example, if on the 2-hour timeframe the trading range of the CAD/ILS pair is 10 pips, then a trader can expect to either gain or lose $38.5

Here’s the trading range for the CAD/ILS pair.

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/ILS Cost as a Percentage of the Trading Range

The cost of trading any currency involves the slippage, fees, and the spread. These costs vary across different timeframes under different volatility conditions. For a forex trader, analyzing the cost as a percentage of the trading range helps implement informed risk management techniques.

The tables below show the analyses of the trading costs for the CAD/ILS pair across different timeframes.

ECN Model Account

Spread = 22 | Slippage = 2 | Trading fee = 1

Total cost = 25

STP Model Account

Spread = 27 | Slippage = 2 | Trading fee = 0

Total cost = 29

The Ideal Timeframe to Trade CAD/ILS

We can see that the trading cost for the CAD/ILS pair is higher during shorter timeframes and low volatility in both the ECN and STP accounts. Longer-term traders trading on weekly and monthly timeframes enjoy relatively lesser trading costs than shorter timeframe traders.

It is worth noting that for every type of trader, initiating trades when volatility is above average reduces the trading costs. Furthermore, opting to use forex limit orders instead of market orders which are susceptible to slippage, can significantly reduce trading costs. With limit orders, the risk of slippage is removed hence lowering trading costs. Here are the trading costs when limit orders are used.

ECN Account Using Limit Model Account

Total cost = Slippage + Spread + Trading fee

= 0 + 22 + 1 = 23

We can see that trading costs for the CAD/ILS have reduced across all timeframes, with the highest cost dropping from 491.53% to 372.88% of the trading range.

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Forex Assets

Analysing The Costs Involved While Trading The CAD/INR Exotic Currency Pair

Introduction

Introduction

Introduction

The CAD/INR pair is considered an exotic currency pair where CAD is the Canadian Dollar, while the INR is the Indian Rupee. This article will cover the basic elements of the CAD/INR pair that you should know before you start trading the pair.

In this pair, the CAD is the base currency, while the INR is the quote currency. Therefore, the price attached to the CAD/INR pair is the amount of INR that can be bought by 1 CAD. For example, if the price of CAD/INR is 55.059, it means that for every 1 CAD, you can get 55.059 INR.

CAD/INR Specification

Spread

The price at which you can buy a currency pair is different from the price at which you can sell the same pair. This difference is the spread. The spread is considered a source of revenue for brokers and a trading cost for forex traders. The spread for the CAD/INR pair is as follows.

ECN: 39 pips | STP: 44 pips

Fees

The trading fee is the commission you pay your forex broker for every trade you make. STP accounts usually have no trading fees, while the fees charged on ECN accounts vary from broker to broker.

Slippage

Slippage represents the difference between the price at which you place a trade and the price at which your broker will execute the trade. Market volatility and the broker’s efficiency determine the amount of slippage.

Trading Range in the CAD/INR Pair

The trading range in forex helps a trader analyze the extent of a currency pair’s fluctuation during a specific timeframe. As measured in pips, this fluctuation can help determine the volatility of the pair and the expected gains or losses. For example, if in the 4-hour timeframe the CAD/INR pair has a volatility of 30 pips, a trader can expect to either gain or lose $54 since the value of 1 pip is $1.8

The table below shows the minimum, average, and maximum volatility of CAD/INR 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/INR Cost as a Percentage of the Trading Range

The knowledge of the potential costs when trading helps determine the trading strategies to be used. Cost as a percentage of the trading range will help us understand how trading costs vary with volatility under different timeframes.

Total cost = Slippage + Spread + Trading Fee

The tables below show the analyses of percentage costs in both ECN and STP accounts.

ECN Model Account

Spread = 39 | Slippage = 2 | Trading fee = 1

Total cost = 42

STP Model Account

Spread = 44 | Slippage = 2 | Trading fee = 0

Total cost = 46

The Ideal Timeframe to Trade CAD/INR

Depending on your forex trading style, you can use the above analysis to coincide with your trade of the CAD/INR pair with moments of lower trading costs. The 1-hour timeframe for the STP and the ECN accounts has the highest trading costs of 779.66% and 711.86% of the trading range, respectively. Also, notice that the highest costs coincide with the lowest volatility of 3.1 pips.

Trading longer timeframes like the 1-week and the 1-month timeframes are associated with lower costs. However, trading when the CAD/INR pair’s volatility is above average has a lower cost. Another way of reducing trading costs is by using the limit order types, which eliminates the slippage costs. Here’s how it works.

Total cost = Slippage + Spread + Trading fee

= 0 + 39 + 1 = 40

When limit orders are used, the slippage cost becomes zero. Consequently, the trading costs are significantly reduced, with the highest trading cost dropping from 711.86% to 677.97% of the trading range.

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Forex Assets

Asset Analysis – Trading The CAD/PHP Forex Currency Pair

Introduction

Introduction

Introduction

CAD/PHP is an exotic Forex currency pair where CAD is the Canadian Dollar while PHP is the Philippine Peso, the Philippines’ official currency. This article will cover fundamental aspects that you should know about CAD/PHP before you start trading the pair.

Understanding CAD/PHP

In this currency pair, the CAD is the base currency, and the PHP is the quote currency. The CAD/PHP pair price represents the quantity of the PHP that can be bought by 1 CAD. If the CAD/PHP price is 36.181, it means that for every 1 CAD you have, you can buy 36.181 PHP.

CAD/PHP Specification

Spread

In forex trading, the spread is the difference in the value at which a trader can buy a currency pair and the price at which they can sell it.

ECN: 10 pips | STP: 15 pips

Fees

There are no trading fees associated with STP accounts. However, for the ECN accounts, the trading fees that you will incur per transaction are determined by your forex broker.

Slippage

When trading forex, slippage occurs when there is a difference between the price at which you place your trade and the price at which your broker executes it. Slippage in forex frequently happens at times of higher volatility or when significantly larger orders are made.

Trading Range in the CAD/PHP Pair

Forex traders should know how a given currency pair changes within different timeframes. This change in terms of pips is referred to as the trading range. It is used to analyze the historical volatility of a given pair across different timeframes. Therefore, the trading range can be used to determine the amount of profit that a trader should expect to earn.

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/PHP Cost as a Percentage of the Trading Range

Slippage, spread, and brokers’ fees amount to trading costs to a forex trader.

Total cost = Slippage + Spread + Trading Fee

Therefore, forex traders should be aware of how these costs vary during different timeframes depending on the pip change of the currency they trade.

The tables below are of the percentage costs that can be expected when trading the CAD/PHP pair under the ECN and STP account types. The costs are expressed as 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 CAD/PHP

From the above trading range cost analysis, the most cost is incurred at the 1H timeframe at 220.34% for the ECN account and 288.14% for the STP account. These costs imply that it is not ideal to trade during times of low volatility of about 2.3 pips. However, the trading costs associated with the 1H, 2H, 4H, and the 1D timeframes are lower when the market volatility is above average. Intraday traders can time their entry when the volatility of the CAD/PHP is above average.

The longer timeframes for both types of accounts have lower trading costs associated with them. Thus, longer-term traders can get to enjoy lower costs.

Forex traders can also significantly reduce their trading costs by employing limit order types to ensure they do not experience slippage costs. Let’s look at the total costs when slippage is zero with the ECN account.

Total cost = Slippage + Spread + Trading fee

= 0 + 10 + 1 =11

With the ECN account, the highest trading cost reduces from 220.334% to 169.49%, showing that using the limit order types significantly reduces the trading costs.

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Forex Assets

Costs Involved While Trading The CAD/RON Forex Exotic Pair

Introduction

Introduction

Introduction

The CAD/RON is an exotic currency pair where CAD is the Canadian Dollar, and RON is the Romanian Leu. This article will explain some basic elements about the CAD/RON you ought to know before you start trading this pair. The CAD is the base currency, and RON is the quote currency in the CAD/RON exotic pair.

Thus, the CAD/RON pair’s price represents the amount of RON that you can buy using 1 CAD. If the pair’s current price is 3.1292, it means that you can use 1CAD to purchase 3.1292 RON.

CAD/RON Specification 

Spread

When trading forex, the spread represents the difference between the price at which a currency pair can be bought (bid price) and the price it can be sold at (ask price).

The spread for the CAD/RON pair is: ECN: 35 pips | STP: 39 pips

Fees

The STP accounts have no trading fees attached. Trading fees for the ECN accounts vary depending on your choice of forex broker.

Slippage

When trading in the forex market, sometimes the price you request on an order tends to be different from the price your broker executes the trade. This difference is known as slippage, and it depends on the broker’s speed of execution and market volatility.

Trading Range in the CAD/RON Pair

To ensure that proper risk management measures are taken, forex traders should know how much a currency pair fluctuates within a given timeframe. Trading range analysis can help forex traders to determine the volatility associated with trading a particular currency pair. This volatility is measured in terms of pips. If the CAD/RON pair has a volatility of 10 pips within the 1-hour timeframe, then a forex trader can be expected to gain or lose $32 since the value of 1 pip of CAD/RON is $3.2

Below is a table showing the minimum, average, and maximum volatility of CAD/RON 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/RON Cost as a Percentage of the Trading Range

When trading forex, the costs you can expect to incur include; brokers’ fees, slippage, and spread.

Total cost = Slippage + Spread + Trading Fee

The tables below show the analyses of percentage costs in both ECN and STP accounts.

ECN Model Account

Spread = 35 | Slippage = 2 | Trading fee = 1

Total cost = 38

STP Model Account

Spread = 39 | Slippage = 2 | Trading fee = 0

Total cost = 41

The Ideal Timeframe to Trade CAD/RON

From the above cost analysis, we can observe that the cost of trading the CAD/RON pair varies across different timeframes depending on the volatility. For both the STP and the ECN accounts, the 1-hour timeframe carries the highest costs at 694.92% and 644.07%, respectively. These higher costs are associated with the low volatility of 0.1 pips observed during the 1-hour timeframe.

We can also notice that the trading costs drop significantly when the volatility across all timeframes is above average. Therefore, for intraday forex traders, placing trades when the volatility is above average might be a better way of reducing the trading costs associated with the CAD/RON pair. On the other hand, longer-term traders of the pair enjoy lesser trading costs.

One way for traders to reduce their trading costs is to use limit order types. These forex order types eliminate the effects of slippage, thus make the associated slippage costs zero. Below are costs for a trader using limit orders.

ECN Model Account (Using Limit Orders)

Total cost = Slippage + Spread + Trading fee

= 0 + 35 + 1 = 36

As you can see, the trading costs are significantly reduced when limit orders are employed. The highest trading costs dropped from 644.07% to 610.17% of the trading range.

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Forex Assets

Trading The CAD/ZAR Forex Cross Currency Pair & Analyzing The Costs Involved

Introduction

Introduction

Introduction

The CAD/ZAR is an Exotic forex currency cross. CAD represents the Canadian Dollar, and the ZAR corresponds to the South African Rand. CAD is the base currency in this pair, while the ZAR is the quote currency. This pair’s exchange rate shows the value of the ZAR, which is equivalent to 1 CAD. If the pair’s exchange rate is 12.7969, it means that 12.7969 ZAR is equivalent to 1 CAD.

CAD/ZAR Specification

Spread

The spread in forex is calculated by subtracting the bid price from the asking price. Brokers determine the spread since it’s their primary source of revenue. Below is the spread charges for ECN and STP brokers for CAD/ZAR pair.

ECN: 39 pips | STP: 44 pips

Fees

Forex traders with the ECN type accounts have to pay a commission to their brokers for every position they open. Brokers do not charge any trading fees on STP accounts.

Slippage

The difference between the trade price preferred by a trader and the broker’s execution price is the slippage. In forex, slippage depends on market volatility and the speed at which the broker executes the trade.

Trading Range in the CAD/ZAR Pair

The trading range is best described as the analysis of how the exchange rate of a currency fluctuates across different timeframes. This analysis will help to estimate the expected returns from trading a particular currency pair. If, for example, on the 1-hour timeframe, the volatility of the CAD/ZAR is ten pips, a trader can expect to gain or lose $78. The trading range for the CAD/ZAR pair is shown below.

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/ZAR Cost as a Percentage of the Trading Range

To make an informed risk management decision when trading the CAD/ZAR pair, we can analyze how the trading costs vary across different timeframes with different volatilities. Here are the cost analyses for the CAD/ZAR pair for both ECN and STP accounts.

ECN Model Account

Spread = 39 | Slippage = 2 | Trading fee = 1

Total cost = 42

STP Model Account

Spread = 44 | Slippage = 2 | Trading fee = 0

Total cost = 46

The Ideal Timeframe to Trade CAD/ZAR

We can notice that shorter timeframes have higher trading costs than the longer timeframes for both the ECN and the STP accounts. Also, across all timeframes, the trading costs reduce as the trading range of the CADZAR pair increases from minimum to maximum.

Although longer-term traders enjoy lesser trading costs, intraday traders can reduce their trading costs by trading when the volatility ranges between medium to the maximum. We can also further reduce the trading costs by implementing forex limit orders, which ensures that slippage does not affect your prices. Here is how trading costs can be reduced using forex limit orders.

ECN Account Using Limit Model Account

Total cost = Slippage + Spread + Trading fee

= 0 + 39 + 1 = 40

Using limit orders has significantly reduced trading costs. For the CAD/ZAR pair, the highest cost has been reduced from 711.86% of the trading range to 677.97%.

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Forex Assets

Trading The CAD/SEK Forex Exotic Currency Pair & Analyzing The Costs Involved

Introduction

Introduction

Introduction

CAD/SEK is a Forex exotic currency pair, where CAD is the primary currency of Canada, and SEK (Swedish Krona) is the currency of Sweden. In this exotic currency pair, CAD is considered the base currency, and SEK as the quote currency. This pair’s price determines the value of SEK, which is equivalent to one CAD. We can quote it as 1 CAD per X numbers of SEK. For example, if the CADSEK pair’s value is at 6.5877, we would need almost 6.5877 SEK to buy one CAD.

CAD/SEK Specification

Spread

In all the financial markets, the spread represents the difference between the Bid and Ask prices. It is typically a charge that is deducted by the Forex broker. These spread values vary on the type of execution model used for trade execution.

The spread of the CAD/SEK pair on ECN is 39 pips, and on the STP model account is 44 pips.

Fees

The trading fees that forex brokers are similar to the stock market. It is deducted from the traders’ accounts as soon as they open a new position. There is no fee charged on STP accounts, but a few pips are charged on ECN accounts.

Slippage

Slippage occurs when a trader opens a trade at a price, but it opens at another price by expanding the spread. The main reason for the slippage to occur is the market volatility and the broker’s execution speed.

Trading Range in CAD/SEK

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.

CAD/SEK Cost as a Percent of the Trading Range

The below tables represent the percentage values of trading costs involved while trading this particular Forex asset in various time frames. Please note that these values must be used for directional purposes only. So, for instance, if the percentage of costs involved is high in the one-hour time frame, it implies that this pair is expensive to trade in that particular time frame.

ECN Model Account 

Spread = 39 | Slippage = 5 | Trading fee = 8

Total cost = Spread + Slippage + Trading Fee

= 39 + 5 + 8 = 52

STP Model Account

Spread = 44 | Slippage = 5 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee

= 39 + 5 + 0 = 49

The Ideal way to trade the CADSEK

The CAD/SEK is an exotic cross currency pair with sufficient liquidity. As a result, traders may find it easy to trade in this pair. If we look at the table, we would see that the percentage values did not move above 65%, representing a lower trading fee even in the lower timeframe. Therefore, trading in this currency pair is suitable for intraday, swing, and even scalping. However, the best decision is to trade when the cost of trading is at the average value.

There is another way to reduce the cost while trading this pair, and it is to place a pending order. We can either place a limit or stop order instead of the market order. In that case, the slippage won’t be considered while calculating the total costs. Therefore, in our example, the overall cost will be reduced by five pips, as shown below.

STP Model Account (Using Limit Orders)

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

Total cost = Spread + Slippage + Trading Fee

= 44 + 0 + 0 = 44

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Forex Assets

Everything About Trading The CAD/SGD Forex Currency Pair

Introduction

Introduction

Introduction

CAD/SGD is a Forex exotic currency pair where CAD represents the Canadian Dollar and the SGD, – the Singapore Dollar. For this pair, the CAD is the base currency, and the SGD is the quote currency. Therefore, the price attached to the pair is the quantity of the SGD that can be bought by 1 CAD. If the price of the CAD/SGD pair is 1.0289, it means that 1 CAD dollar buys for 1.0289 SGD.

CAD/SGD Specification

Spread

In forex trading, the difference in pips between the buying price (bid) and selling price (ask) is the spread. Forex brokers primarily generate their revenues through the spread. The spread varies depending on the type of trading account. The spread for the CAD/SGD pair is:

ECN: 7 pips | STP: 12 pips

Fees

For every individual trade made on an ECN account, one has to pay a commission. This fee varies with the broker and depends on the type of trade executed and the currency being traded. STP accounts do not have fees.

Slippage

In forex trading, slippage is the difference in the price in which a trader initiates a trade and the price at which it is executed. Slippage is a direct result of the brokers’ speed of execution and market volatility.

Trading Range in the CAD/SGD Pair

In forex, the trading range shows the fluctuation of a currency pair within s specific timeframe. The trading range is useful to estimate potential profit or loss from trading different timeframes. For example, if the CAD/SGD pair fluctuates ten pips in the 2-hour timeframe, it means that a trader can expect to either gain or lose $97 by trading one standard lot.

Below is a table showing the minimum, average, and maximum volatility of CAD/SGD 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/SGD Cost as a Percentage of the Trading Range

Cost expressed as the Percentage of the trading range helps a forex trader establish the anticipated trading costs under different market volatility across different timeframes.

Total cost = Slippage + Spread + Trading Fee

The tables below show the percentage costs to be expected when trading the CAD/SGD pair. The costs are expressed as a percentage of pips.

ECN Model Account

Spread = 7 | Slippage = 2 | Trading fee = 1

Total cost = 10

STP Model Account

Spread = 12 | Slippage = 2 | Trading fee = 0

Total cost = 14

The Ideal Timeframe to Trade CAD/SGD

We can see that in both the ECN and the STP accounts, costs are higher when volatility is at a minimum across all timeframes. Furthermore, we can observe that these costs tend to reduce when the volatility increases to the maximum.

For the CAD/SGD pair, costs are highest when volatility is at the lowest at 0.02 pips during the 1-hour timeframe. Conversely, the trading costs are lowest at the 1-month timeframe when volatility is at a maximum of 8.7 pips. Since high volatility can be risky and low volatility less profitable, forex traders should consider trading during times of average volatility.

More so, traders can increase their profitability by eliminating the costs associated with slippage. By using limit instead of market orders, forex traders can avoid experiencing slippage when entering and exiting positions.

Let’s have a look at how zero slippage cost affects the total costs.

ECN Account Using Limit Model Account

Total cost = Slippage + Spread + Trading fee

= 0 + 7 + 1 = 8

Notice that using the limit order type reduces the overall costs. The highest cost, for example, has reduced from 169.49% to 135.59%.

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Forex Assets

Costs Involved While Trading The ‘CAD/TWD’ Forex Exotic Currency Pair

Introduction

Introduction

Introduction

The CAD/TWD is an exotic currency pair where CAD is the Canadian Dollar, and the TWD is referred to as the Taiwan New Dollar. In this pair, CAD is the base currency, and the TWD is the quote currency, which means that the exchange rate for the pair shows the quantity of TWD that can be bought by 1 CAD. In this case, if the exchange rate for the pair is 21.864, then 1 CAD buys 21.864 TWD.

CAD/TWD Specification

Spread

In the forex market, the spread is considered a cost to the trader. It is the difference between the ‘bid’ and the ‘ask’ price. Here are the spread charges for ECN and STP brokers for CAD/TWD pair.

ECN: 29 pips | STP: 34 pips

Slippage

When trading forex, slippage occurs when the execution price is below or above the price at opening the trade. The primary causes of slippage are the brokers’ speed of execution and market volatility.

Trading Range in the CAD/TWD Pair

The trading range in forex is used to analyze the volatility of a currency pair across different timeframes. This analysis gives the trader a rough estimate of how much they stand to gain or lose by trading that pair over a given timeframe. For example, say the volatility of the CAD/TWD pair at the 1-hour timeframe is 20 pips. Then, a trader can anticipate to either profit or lose $91.4

The trading range for the CAD/TWD pair is shown below.

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/TWD Cost as a Percentage of the Trading Range

For us to understand the trading costs associated with the volatility, we will determine the total cost for both ECN and STP accounts as a ratio of the above volatility.

ECN Model Account

Spread = 29 | Slippage = 2 | Trading fee = 1

Total cost = 32

STP Model Account

Spread = 34 | Slippage = 2 | Trading fee = 0

Total cost = 36

The Ideal Timeframe to Trade CAD/TWD

From the above analyses, we can conclude that it is costlier trading the CAD/TWD pair on shorter timeframes when volatility is low. Longer timeframes, i.e., the weekly and the monthly timeframes, have lesser trading costs. Therefore, it would be more profitable trading the CAD/TWD pair over longer timeframes.

However, for intraday traders, opening positions when the volatility is above the average will reduce the trading costs. More so, using forex limit orders instead of market orders will reduce the trading costs by eliminating the costs associated with slippage. Here’s an example.

ECN Account Using Limit Model Account

Total cost = Slippage + Spread + Trading fee

= 0 + 29 + 1 = 30

You can notice that using the limit orders significantly reduces the cost as a percentage of the trading range.

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Forex Assets

Trading The ‘CAD/MYR’ Forex Exotic Currency Pair

Introduction

Introduction

Introduction

The CAD/MYR is an exotic Forex currency pair where CAD is the Canadian Dollar, and the MYR is the Malaysian Ringgit. In this pair, CAD is the base currency, while the MYR is the quote currency. The price associated with this pair represents the amount of MYR that can be traded for 1 CAD. For example, if the price of the CAD/MYR is 3.1163, it means that 1 CAD can purchase 3.1163 MYR.

CAD/MYR Specification

Spread

When trading a currency pair, the ‘bid’ price and the ‘ask’ price are different. This difference constitutes the revenues that brokers earn, and is called the spread. Below is the spread charges for ECN and STP brokers for CAD/MYR pair.

ECN: 4 pips | STP: 9 pips

Fees

Fees represent the charges that brokers impose on forex traders when opening a position. These charges vary on the ECN account, depending on your forex broker. STP accounts usually do not charge fees for trading.

Slippage

Sometimes we intend to complete a trade with a prevailing price, but instead, the trade is executed at a different price. The difference between the two prices is slippage, and it is a result of market volatility and your broker’s speed of execution.

Trading Range in the CAD/MYR Pair

The trading range shows the volatility of a currency pair across different timeframes from minimum to the maximum expected volatility. The knowledge of market volatility can help a trader estimate possible gains or losses for different timeframes. Let’s say that the maximum volatility for the CAD/MYR pair at the 1-hour timeframe is 20 pips. A forex trader trading one standard lot of this pair can expect to gain or lose $64.2

Below is the trading range for the CAD/MYR pair.

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/MYR Cost as a Percentage of the Trading Range

When the cost of trading is expressed as a percentage of the trading range, it can help a forex trader implement proper risk management measures. Below are cost analyses of the CAD/MYR pair for both the ECN and the STP accounts.

ECN Model Account

Spread = 4 | Slippage = 2 | Trading fee = 1

Total cost = 7

STP Model Account

Spread = 9 | Slippage = 2 | Trading fee = 0

Total cost = 11

The Ideal Timeframe to Trade CAD/MYR

In both the ECN and STP accounts, the 1-hour timeframe during minimum volatility of 0.1 pips has the highest trading cost. Generally, the 1H, 2H, 4H, and daily timeframes have higher trading costs compared to the weekly and the monthly timeframes. Therefore, longer-term traders of the CAD/MYR pair enjoy lesser trading costs.

However, the intraday traders can reduce their trading costs by initiating trades when the volatility for the 1H, 2H, 4H, and daily timeframes is above average. They can further lower these costs by using the forex limit orders, which eliminates the slippage costs. Here’s an example with the ECN account.

ECN Account Using Limit Model Account

Total cost = Slippage + Spread + Trading fee

= 0 + 4 + 1 = 5

You can notice that the overall trading costs have reduced when the limit orders are used. For example, the highest trading cost has been lowered from 118.64% to 84.75% of the trading range. Cheers.

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Forex Assets

Trading The NZD/HKD Forex Exotic Currency Pair

Introduction

Introduction

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

Spread

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.

Spread on ECN: 31 pips | Spread on STP: 35 pips

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.

Trading Range in NZD/HKD

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.

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

Total cost = Spread + Slippage + Trading Fee

= 31 + 5 + 8

Total cost = 44

STP Model Account

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

Total cost = Spread + Slippage + Trading Fee

= 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

Total cost = Spread + Slippage + Trading Fee

= 31 + 0 + 0 = 31 

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Forex Assets

Asset Analysis – Trading The NZD/QAR Forex Exotic Pair

Introduction NZD is the authorized currency of New Zealand, while the QAR (Qatari Rial) is the official currency of Qatar. The combination of these two currencies forms the NZDQAR exotic pair. As a trader, we aim to identify the possible movement in this pair by an appropriate analysis method and make money from the differential. […]

Introduction NZD is the authorized currency of New Zealand, while the QAR (Qatari Rial) is the official currency of Qatar. The combination of these two currencies forms the NZDQAR exotic pair. As a trader, we aim to identify the possible movement in this pair by an appropriate analysis method and make money from the differential. […]

Introduction

NZD is the authorized currency of New Zealand, while the QAR (Qatari Rial) is the official currency of Qatar. The combination of these two currencies forms the NZDQAR exotic pair. As a trader, we aim to identify the possible movement in this pair by an appropriate analysis method and make money from the differential.

Understanding NZD/QAR

In every currency pair, the first currency is known as the base currency, and the second currency is known as the quote currency. We can quote it as 1 NZD per X numbers of QAR. For example, if the NZDQAR pair’s value is at 2.4460; therefore, we need almost 2.4460 QAR to buy one NZD.

NZD/QAR Specification

Spread

The bid price is the price level that buyers are willing to pay when they buy an instrument. Similarly, ask price is the lowest price that a seller is willing to pay when they sell a currency pair. The difference between these prices is known as Spread. This value changes with the change of the execution model.

Spread on ECN: 12 pips | Spread on STP: 17 pips

Fees

The fee or commission in Forex is similar to the one that is pair to stockbrokers where it is automatically deducted from traders’ accounts when they take a trade. However, an STP account does not take any fees but a few pips on ECN accounts.

Slippage

There is some market condition when we enter a buy or sell trade, but the trade opens some pips higher or lower, known as Slippage. The Slippage might happen when the market is volatile.

Trading Range in NZD/QAR

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.

NZDQAR Cost as a Percent of the Trading Range

With the volatility values obtained from the above table, we can see how the cost varies as the volatility of the market varies. All we did is, got the ratio between the total cost and the volatility values and converted into percentages.

ECN Model Account 

Spread = 12 | Slippage = 5 | Trading fee = 8

Total cost = Spread + Slippage + Trading Fee

= 12 + 5 + 8 = 25

STP Model Account

Spread = 17 | Slippage = 5 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee

= 17 + 5 + 0 = 22

The Ideal way to trade the NZD/QAR

The NZD/QAR is a currency pair that has a lot of volatility and liquidity. Therefore, it is easier for a trader to trade this exotic-cross currency. If we analyze the table mentioned above, we can say that the H1 timeframe has the highest cost as a percentage of the trading range at an average of 44.64%, where the average movement is almost 56 pips. The increase in volatility provides higher price fluctuation, but it is often risky for a trader as there is a possibility of unwanted stop loss hit and reverse back.

Moreover, in the monthly timeframe, the price of the NZD/QAR provides an excellent movement with a low cost of an average of 0.77% only. Therefore, if we trade this pair in a higher timeframe, we might reduce the risk of market volatility. We can also use limit orders in the place of market orders to further reduce the costs, as shown below.

STP Model Account (Using Limit Orders)

Spread = 12 | Slippage = 0 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee

= 12 + 0 + 0 = 12

Categories
Forex Assets

Asset Analysis – Trading Costs Involved While Trading The CAD/AED Currency Pair

Introduction

Introduction

Introduction

CAD/AED is a Forex exotic currency pair, where CAD represents the currency of Canada, an AED is the currency of the UAE. In this exotic currency pair, CAD is the base first, and AED is the second currency.

Understanding CADAED

This pair’s price determines the value of AED, which is equivalent to one CAD. We can term it as 1 CAD per X numbers of AED. For example, if the CAD/AED pair’s value is at 2.8007; therefore, we need almost 2.8007 AED to buy one CAD.

CADAED Specification

Spread

In every financial market, Spread represents the difference between the Bid and Ask. It is usually a charge that is deducted by the forex broker. This value changes with the type of execution model.

Spread on ECN: 10 pips | Spread on STP: 15 pips

Fees

The trading fees in the forex market and stock market are the same. It is deducted from the traders’ accounts as soon as they open a new position. Note that STP accounts do not charge anything, but a few pips charges on ECN accounts.

Slippage

Slippage happens when price opens above or below the execution level. Slippage occurs because of two important reasons – market volatility and broker’s execution speed.

Trading Range in CADAED

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.

CADAED Cost as a Percent of the Trading Range

The volatility values on the above table indicate how the cost varies with the change in market volatility. All we did is to get the ratio between the total cost and the volatility values and converted them into percentages.

ECN Model Account 

Spread = 10 | Slippage = 5 | Trading fee = 8

Total cost = Spread + Slippage + Trading Fee

= 10 + 5 + 8 = 23

STP Model Account

Spread = 10 | Slippage = 5 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee

= 10 + 5 + 0 = 15

The Ideal way to trade the CADAED

The CADAED is an exotic cross currency pair with higher volatility and liquidity. Because of this, traders may find it easy to trade in this pair. We can see that the percentage values above where the value did not move above 230% that represents a higher trading cost in the lower timeframe. However, when we move to the monthly timeframe, the average cost came to below 2%.

Therefore, trading intraday in this currency pair is risky due to the high trading cost. On the other hand, trading in a higher timeframe has less cost, but it requires a lot of patience and time. Overall, for every trader, it is recommended to stick on trading where the trading cost is at the average value.

Another way to reduce the cost is to place a pending order as ‘limit’ and ‘stop’ instead of ‘market.’ In that case, there will be no slippage in the calculation of the total costs. So, in our example, the overall cost will be reduced by five pips.

STP Model Account (Using limit orders) 

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

Total cost = Spread + Slippage + Trading Fee

= 10 + 0 + 0 = 10

Categories
Forex Signals

EUR/USD Choppy Trading Continues – An Update on Signal!

The EUR/USD remain depressive near 1.18 level, mainly due to the coronavirus latest report, which fueled fears that the economic recovery could halt once again. Despite the risk-off market sentiment in the Asian stock markets, the broad-based U.S. dollar struggled to draw safe-haven bids but failed at least now. In turn, the currency pair got helped to limit its deeper losses and hold above 1.18 level. The on-going U.S. Congress’s failure to reach an agreement for the country’s latest COVID-19 stimulus package also adds a burden to the greenback and helps currency pair. At the moment, the EUR/USD currency pair is currently trading at 1.1802 and consolidating in the range between 1.1791 – 1.1826.

The EUR/USD remain depressive near 1.18 level, mainly due to the coronavirus latest report, which fueled fears that the economic recovery could halt once again. Despite the risk-off market sentiment in the Asian stock markets, the broad-based U.S. dollar struggled to draw safe-haven bids but failed at least now. In turn, the currency pair got helped to limit its deeper losses and hold above 1.18 level. The on-going U.S. Congress’s failure to reach an agreement for the country’s latest COVID-19 stimulus package also adds a burden to the greenback and helps currency pair. At the moment, the EUR/USD currency pair is currently trading at 1.1802 and consolidating in the range between 1.1791 – 1.1826.

The EUR/USD remain depressive near 1.18 level, mainly due to the coronavirus latest report, which fueled fears that the economic recovery could halt once again. Despite the risk-off market sentiment in the Asian stock markets, the broad-based U.S. dollar struggled to draw safe-haven bids but failed at least now. In turn, the currency pair got helped to limit its deeper losses and hold above 1.18 level. The on-going U.S. Congress’s failure to reach an agreement for the country’s latest COVID-19 stimulus package also adds a burden to the greenback and helps currency pair. At the moment, the EUR/USD currency pair is currently trading at 1.1802 and consolidating in the range between 1.1791 – 1.1826.

The Cases increased by 1,449 in Germany on the day against Thursday’s +1,445. While the death count increased by 14, the tally showed. Considering the current situation of the virus in Europe, Germany’s Health Minister Jens Spahn said that they are very concerned about the surge in the coronavirus cases but assured that the health system would control everything. As in result, the shared currency weakened and contributed to the currency pair losses.

On the other hand, the on-going uncertainty surrounding the much-awaited U.S. fiscal stimulus or the second wave of coronavirus (COVID-19) adds burden on the broad-based U.S. dollar and capped further downside for the currency pair. The Democrats and Republicans are still struggling to approve an additional stimulus package as authorities hinted that additional stimulus is needed to control the recent wave of the coronavirus’s negative impact.

Despite Thursday’s upbeat U.S. jobs data, the broad-based U.S. dollar failed to gain any positive traction and edged lower on the day as doubts over the U.S. economic recovery remain amid coronavirus crisis. However, the losses in the U.S. dollar helped the currency pair to limit its deeper losses. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped 0.08% to 93.243.

Across the pond, the investor sentiment dampened once again by disappointing Chinese data released earlier in the day. At the data front, China’s industrial production increased by 4.8% over the previous year in July. At the same time, the output expanded for the 4th-straight month, against expectations for a 5.1% year-on-year rise. In the meantime, the retail sales fell 1.1%, worse than an expected 0.1% expansion.

The data overshadowed the optimism made by the deceleration in China’s factory deflation signaled by the producer price index released earlier this month and weakened the risk sentiment in the Asia markets. However, the risk-off market sentiment helped the U.S. dollar put the safe-haven bid and capped its deeper losses.

Moving on, the shared currency could face losses if the Eurozone Gross Domestic Product, which is scheduled to release at 09:00 GMT, shows a bigger-than-expected economic recession in the 2nd-quarter.



The EUR/USD is trading neutral on Friday, as traders seem to wait for major economic data to help drive a breakout. The bullish sentiment seems dominant as the EUR/USD pair trades at 1.1818 level, holding right below an immediate resistance level of 1.1820. Below this, the pair is likely to trade bearish until 1.1783 and 1.1745 level. Conversely, the bullish breakout of the 1.1820 level can lead the pair to be further higher until 1.1860 and the 1.1890 levels.

Entry Price – Sell 1.18014
Stop Loss – 1.18414
Take Profit – 1.17614
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40

Fellas, now you can check out forex trading signals via Forex Academy mobile app. Follow the links below.

iPhone Users: https://apps.apple.com/es/app/fasignals/id1521281368

Andriod Users: https://play.google.com/store/apps/details?id=academy.forex.thesignal&hl=en_US

Categories
Forex Assets

How Expensive Is It To Trade The NZD/MYR Currency Pair

Introduction

Introduction

Introduction

The abbreviation of NZD/MYR is the New Zealand Dollar paired with the Malaysian Ringgit. Here, NZD is the official currency of New Zealand and many others like the Pitcairn Islands and the Cook Islands. It is also to be the tenth most traded currency in the Foreign exchange market. MYR stands for the Malaysian Ringgit, and it is the official currency of Malaysia, which is further divided into 100 sens.

Understanding NZD/MYR

In NZD/MYR currency pairs, NZD is the base currency (First Currency), and the MYR is the quote currency (Second Currency). In the foreign exchange market, while we sell the currency pair, we always trade the base currency and simultaneously purchase the quote currency and vice versa. The market value of NZD/MYR helps us to understand the intensity of MYR against the NZD. So if the exchange value for the pair NZD/MYR is 2.7977, it means we need 2.7977 MYR to buy 1 NZD.

Spread

Foreign brokers hold two different prices for currency pairs: the ask and bid price. The ask (offer) price is the price in which we sell an asset, and bid(purchase) is the cost at which we buy it. The difference between the ask-bid price is called the spread. Below are the spread values for the NZD/MYR Forex pair.

ECN: 38 pips | STP: 43 pips

Fees

A Fee is the costs that we tradesmen pay to the broker for initiating a trade. This fee differs on the type of broker (ECN/STP) we use.

Slippage

When we want to achieve a trade at an appropriate price, but instead, if the trade gets fulfilled at a distinctive price, we call that distinction as Slippage. The Slippage can occur at any point in time, but often we can counter a volatile market.

Trading Range in NZD/MYR

As a trader, our main interest should be to prevent losses and minimize risks. The trading range here will ascertain the amount of income we will make or lose within a timeframe. ATR is a technical indicator that suggests the price movement in a currency pair. In the lower table, we have the interpretation of the minimum, average, and maximum pip movement in a currency pair. We will assess it merely by using the ATR indicator merged with 200-period SMA.

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.

NZD/MYR Cost as a Percent of the Trading Range

The price of trade differs on the type of brokers and varies based on the volatility of the market. The full cost of trade involves fees, spread, and sometimes Slippage if the volatility is higher.

ECN Model Account

Spread = 38 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 38 + 8 = 51 

STP Model Account

Spread = 43 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 43 + 0 = 48

The Ideal way to trade the NZD/MYR

With the assistance of the above tables, let us estimate these two factors to the trade the NZD/MYR pair. Volatility and cost are two aspects a trader must contemplate for trading any currency pair in the foreign exchange market.

In several timeframes, we can see the pip movement is tremendously elevated between the min volatility and the avg volatility. As a day trader, the objective is to attain profits from the pip variation of the market. It becomes challenging to make profits from the market if there is no variation in the pip value. Hence, trading this pair can be considered both profitable and risky. The answer to the question if trading this pair is expensive, is yes.

Trading using Limit Orders (STP Account Model)

To decline our expenses of trade, we can place the trades using limit orders as a substitute for market orders. In doing so, we can avoid the Slippage that will help lower the total cost of the trade. An instance of a Limit order is given below using the STP model.

Spread = 43 | Slippage = 0 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 43 + 0 = 43

Categories
Forex Assets

How Expensive Is It To Trade The NZD/DKK Forex pair?

Introduction NZD is the symbol of the New Zealand dollar, and it is the 10th most traded currency in the Foreign Exchange market. It is the official currency of New Zealand and some other countries like Cook Islands, Niue, the Ross Dependency. Whereas DKK stands for Danish Krone, and it is the official currency of […]

Introduction NZD is the symbol of the New Zealand dollar, and it is the 10th most traded currency in the Foreign Exchange market. It is the official currency of New Zealand and some other countries like Cook Islands, Niue, the Ross Dependency. Whereas DKK stands for Danish Krone, and it is the official currency of […]

Introduction

NZD is the symbol of the New Zealand dollar, and it is the 10th most traded currency in the Foreign Exchange market. It is the official currency of New Zealand and some other countries like Cook Islands, Niue, the Ross Dependency. Whereas DKK stands for Danish Krone, and it is the official currency of Denmark, Greenland, and the Faroe Islands.

The currencies in the Foreign exchange market are traded in pairs. NZD/DKK is the acronym for the New Zealand dollar against the Danish Krone. In this case, the first currency (NZD) is the base currency, and the second (DKK) is the quote currency.

Understanding NZD/DKK

To find the comparative value of one currency in the Forex market, we need another currency to evaluate. If the value of the first(base) currency goes down, the value of the second (quote) currency moves up and vice versa. The market value of NZD/DKK determines the strength of DKK against the NZD. It can be clearly understood as 1 NZD is equal to how much of DKK. So if the exchange price for the pair NZD/DKK is 4.1943, it means we need 4.1943 DKK to buy 1 NZD.

Spread

Forex brokers have two different rates for currency pairs: the bid & ask price. Here the “bid” price at which we can OFFER the base currency, and The “ask” price is at which we can ACQUIRE the base currency. Therefore, the difference between the ask and the bid price is called the spread. Some brokers, instead of charging a split fee for trading, they already have the fees inherent in the spread. Below are the ECN and STP for the pair:

ECN: 15 pips | STP: 20 pips

Fees

When we place any trade, there is some payment/commission we need to pay to the broker. A Fee is simply that payment that we pay to the broker each time we open a position. The fee also fluctuates from the type of broker we use; for instance, there are no charges on STP account models, but a few pips on ECN accounts.

Slippage

The difference between the anticipated and executed price at which the trade is implemented can be termed as Slippage. It can appear at any time but mostly happens when the market is fast-phased and volatile.

Trading Range in NZD/DKK

The trading range is a tabular interpretation of the pip movement in a currency pair for separate timeframes. Using this, we can gauge the risk on a trade for each timeframe. A trading range effectively represents the minimum, average, and maximum pip movement in a currency pair. This can be assessed quickly by using the ATR indicator combined with 200-period SMA.

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.

NZD/DKK Cost as a Percent of the Trading Range

The cost of trade primarily varies on the broker and fluctuates based on the volatility of the market. This is for the reason that the total cost includes Slippage and spreads apart after the trading fee. Following is the description of the cost variation in terms of percentages. The knowledge of it is discussed in the subsequent sections for ECN and STP accounts.

ECN Model Account

Spread = 15 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 15 + 8 = 28

STP Model Account

Spread = 20 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 20 + 0 = 25

The Ideal way to trade the NZD/DKK

The NZD/DKK is an exotic currency pair, and the volatility in this pair is moderate. As seen in the range table above, the average pip movement on the 1hour time frame is 68. We must know that the cost of trade declines as the volatility of the pair increases. But this should not be held as an advantage because it is unsafe to trade high volatile markets as the prices rise and fall swiftly.

For instance, in the 1-hour timeframe, the maximum pip range value in this pair is 119 pips, and the minimum pip range value is 20 pips. When we compare the fees for both the pip movements, we find that for 20 pip movement fees is 140.00%, and for a 119 pip movement, the fess is only 23.53%.

So, we can substantiate that the prices are more significant for low volatile markets and high for extremely volatile markets. Hence, we must constantly try to make our entries and exits when the volatility is minimum or average than to that of maximum values. But if your preference is certainly towards decreasing your trading costs, you can trade when the market’s volatility is near the maximum values with optimal risk management.

Categories
Forex Assets

Asset Analysis – Trading The NZD/SEK Exotic Cross Currency Pair

Introduction NZD/SEK is the acronym for the currency pair New Zealand dollar versus the Swedish Krona. It is marked under the exotic cross-currency pair category. In this pair, NZD will be the base currency, and SEK will be the quote currency. In this article, we shall understand everything about trading this currency pair. Understanding NZD/SEK […]

Introduction NZD/SEK is the acronym for the currency pair New Zealand dollar versus the Swedish Krona. It is marked under the exotic cross-currency pair category. In this pair, NZD will be the base currency, and SEK will be the quote currency. In this article, we shall understand everything about trading this currency pair. Understanding NZD/SEK […]

Introduction

NZD/SEK is the acronym for the currency pair New Zealand dollar versus the Swedish Krona. It is marked under the exotic cross-currency pair category. In this pair, NZD will be the base currency, and SEK will be the quote currency. In this article, we shall understand everything about trading this currency pair.

Understanding NZD/SEK

The price of this pair in the foreign exchange market determines the value of SEK comparable to one NZD. It is quoted as 1 NZD per X SEK. So, if the value of this pair is 5.8296, these many Swedish Kronor (SEK) are required to purchase one NZD.

Spread

Trading the Forex market usually does not involve spending a lot of fees like the Stock market. Here, Forex brokers make profits through spreads. It is nothing but the difference between Bid – Ask prices of an asset. Some broker has the cost inherent into the buy and sell prices of the currency pair; instead of charging a separate fee. Below are the spread values of ECN and STP brokers for the NZD/SEK pair.

ECN: 48 pips | STP: 53 pips

Fees

A Fee is the charges we pay to the stockbroker for executing a particular trade. The fee fluctuates from the type of broker we choose. For example, the fee on the STP accounts is zero, but we can expect a few additional pips on ECN accounts.

Slippage

Slippage is the contrast between the price expected by the trader for execution and the price at which the agent executed the price. There is this variation due to the high market volatility and more passive execution speed.

Trading Range in NZD/SEK

The trading range is used at this point; to measure the volatility of the NZD/SEK pair. The amount of money we will gain or lose in an allotted timeframe can be evaluated using the trading range table. The minimum, average, and maximum pip movement of the currency pair is exemplified in the trading range. This can be evaluated simply by using the ATR indicator combined with 200-period SMA.

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.

NZD/SEK Cost as a Percent of the Trading Range

The rate of trade varies on the stockbroker and fluctuates according to the volatility of the market. This is because the trading cost includes fees, slippage, and the spread. The rate of variation in terms of percentage is given below.

ECN Model Account

Spread = 48 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 48 + 8 = 61

STP Model Account

Spread = 53 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 53 + 0 = 58

The Ideal way to trade the NZD/SEK

The NZD/SEK is termed as an exotic-cross currency pair and has a low volatile market. Looking at the pip range table, the average pip movement on the 1H timeframe is 115 pips, which implies high volatility. As we know, the higher the volatility, the smaller will be the cost to implement the trade. Nonetheless, this is not a benefit to trading in a volatile market; it involves higher risk.

For instance, in the 1M time frame, the Maximum pip range value is 1938, and the minimum is 503. When we evaluate the trading fees for both the pip movements, we notice that for 503 pip movement fees is 12.13%, and for the 1938 pip movement, fess is only 3.15%. Therefore, from the above instance, we can determine that trading the NZD/SEK currency pair will be on the expensive side.

Categories
Forex Assets

NZD/PLN – Analyzing This Exotic Forex Currency Pair

Introduction NZD/PLN is the short form of the currency pair New Zealand dollar vs. Polish Zloty. Here, the New Zealand dollar (NZD) is the base currency, and the Polish Zloty (PLN) is the quote currency. In this article, we intend to comprehend everything you need to know about trading this currency. Understanding NZD/PLN The price […]

Introduction NZD/PLN is the short form of the currency pair New Zealand dollar vs. Polish Zloty. Here, the New Zealand dollar (NZD) is the base currency, and the Polish Zloty (PLN) is the quote currency. In this article, we intend to comprehend everything you need to know about trading this currency. Understanding NZD/PLN The price […]

Introduction

NZD/PLN is the short form of the currency pair New Zealand dollar vs. Polish Zloty. Here, the New Zealand dollar (NZD) is the base currency, and the Polish Zloty (PLN) is the quote currency. In this article, we intend to comprehend everything you need to know about trading this currency.

Understanding NZD/PLN

The price of NZD/PLN signifies the value of the Polish Zloty corresponding to one New Zealand Dollar. It is estimated as 1 NZD (New Zealand Dollar) per X PLN (Polish Zloty). So, if the market value of NZD/PLN is 2.4940, these many Polish Zloty are required to buy one NZ dollar.

Spread

The distinction between the ask & bid costs is recognized as the spread. It changes with the implementation model used by the stockbrokers. Further down are the spreads for NZD/PLN currency pairs in both ECN account models & STP account models:

ECN: 30 pips | STP: 35 pips

Fees

There are certain charges levied by the broker to open every spot in the trade. These charges can be referred to as the commission or fees applicable to the trade. Note that these charges are only applicable to the ECN accounts and not on STP accounts. However, a few additional pips are changed on STP account models.

Slippage

Due to high market volatility and the broker’s slow implementation speed, slippage is common. It is a variance in price intended by the trader and price implemented by the broker.

Trading Range in NZD/PLN

The trading range is essentially a tabular interpretation of the pip movement in the NZD/PLN currency pair for distinct timeframes. These figures can be used to ascertain the trader’s risk as it helps us determines the approx. gain/loss that can be incurred on a trade.

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.

NZD/PLN Cost as a Percent of the Trading Range

The total cost consists of slippage, trading fee, and the spread. This fluctuates with the volatility of the market. Therefore, traders need to place themselves to avoid paying high costs. Below is a table demonstrating the variation in the costs for various values of volatility.

ECN Model Account

Spread = 30 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 30 + 8 = 43 

 

STP Model Account

Spread = 35 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 35 + 0 = 40

The Ideal way to trade the NZD/NOK

NZD/PLN is an exotic-cross currency pair. In this case, we can see, the average pip movement in 1hr timeframe is 46, which signifies higher volatility. The smaller the volatility, the higher is the risk, and lesser is the cost of the trade and the other way around. For example, we can see from the trading range that when the pip movement is lesser, the charge is higher, and when the pip movement is higher, the charge is smaller.

To further decrease our costs of trade, the costs can be reduced even more by placing orders as a limit or stop as an alternative to the market orders. In executing so, the slippage will become zero and will lower the total cost of the trade further. In doing so, the slippage will be eliminated from the computation from the total costs. And this will assist us in decreasing the trading cost by a significant margin. An instance of the same is given below using the STP model account.

STP Model Account (Using Limit Orders)

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

Total cost = Slippage + Spread + Trading Fee = 0 + 35 + 0 = 35

Categories
Forex Assets

Asset Analysis – Comprehending The NZD/NOK Exotic Forex Pair

Introduction NZD/NOK is the abbreviation for the currency pair New Zealand dollar versus the Norwegian Krone. It is referred to as an exotic cross-currency pair. In this case, NZD is the base currency, and NOK is the quote currency. In this article, we shall learn about everything you need to know about this currency. Comprehending […]

Introduction NZD/NOK is the abbreviation for the currency pair New Zealand dollar versus the Norwegian Krone. It is referred to as an exotic cross-currency pair. In this case, NZD is the base currency, and NOK is the quote currency. In this article, we shall learn about everything you need to know about this currency. Comprehending […]

Introduction

NZD/NOK is the abbreviation for the currency pair New Zealand dollar versus the Norwegian Krone. It is referred to as an exotic cross-currency pair. In this case, NZD is the base currency, and NOK is the quote currency. In this article, we shall learn about everything you need to know about this currency.

Comprehending NZD/NOK

Understanding the value of a currency pair is simple. The value of NZD/NOK verifies the Norwegian Krone that must be paid to buy one New Zealand dollar. It quoted as 1 NZD per X NOK. For instance, if the current value of NZD/NOK is 6.0549, then 6.0549 NOK is required to buy one NZD.

Spread

Spread is the keyway through which stockbrokers make income. The selling price and buying price are different; the distinction between these prices is termed as the spread. It ranges from broker to broker and their implementation type. Below are the spreads for NZD/NOK currency pairs in both ECN & STP account models:

ECN: 20 pips | STP: 25 pips

Fees

For every execution, there is a cost levied by the broker. This cost is also indicated as the commission/fee on a trade. This fee/commission does not apply to STP accounts; however, a few additional pips are charged.

Slippage

Slippage is the difference in the price executed by you and the price you indeed received. It occurs on market orders. Slippage varies on two factors:

  • Market’s volatility
  • Broker’s execution speed

Trading Range in NZD/NOK

The trading range is a tabular description of the pip movement in a currency pair in a variety of timeframes. These values help in evaluating the risk-on trade as it defines the minimum, average, and maximum profit that can be made on a trade.

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.

NZD/NOK Cost as a Percent of the Trading Range

The total cost of the trade shifts/changes based on the volatility of the market; hence we must figure out the instances when the costs are less to place ourselves in the market. The table below exhibits the variation in the costs based on the change in the market’s volatility.

Note: The ratio signifies the relative scale of costs and not the stable costs on the trade.

ECN Model Account

Spread = 20 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 20 + 8 = 33 

STP Model Account

Spread = 25 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 25 + 0 = 30

The Ideal way to trade the NZD/NOK

NZD/NOK is an exotic currency pair, and hence we can see, the average pip movement in 1hr timeframe is 120, which indicates higher volatility. The greater the volatility, the higher is the risk, and smaller is the cost of the trade and the other way around. Taking an instance, we can see from the trading range that when the pip movement is smaller, the charge is elevated, and when the pip movement is higher, the charge is lower.

To further decrease our costs of trade, we may place trades using limit orders as an alternative to the market orders. In the below table, we will see the interpretation of the cost percentages when limit orders are applied. As we can see, the slippage is zero. In doing so, the slippage will be excluded from the calculation from the total costs. And this will help us in lowering the trading cost by a sizeable margin. An example of the same is given below.

STP Model Account (Using Limit Orders)

Spread = 25 | Slippage = 0 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 25 + 0 = 25

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Forex Assets

Everything About Trading The NZD/RON Forex Exotic Pair

Introduction

Introduction

Introduction

NZD/RON is the acronym for the New Zealand Dollar against the Romanian Leu. It is categorized as an exotic-cross currency pair that usually has a low trading volume. Here, the New Zealand Dollar is the base currency, and the Romanian Leu (on the right) is the quote currency. The RON (Romanian Leu) is the formal currency of Romania, and one RON is further divided into 100 bani.

Understanding NZD/RON

To identify the relative value of one currency, we require another currency to compare. If the base currency’s value comes down, the value of the quote currency goes up and contrariwise. If the market cost of this pair is 2.7393, then this amount of RON is required to buy one unit of NZD.


Spread

Foreign exchange brokers have two separate prices for currency pairs, which are categorized as the ask and bid price. The offering price is the bid price, and the buying price is the asking price. The difference between the bid/ask price is recognized as the spread. The spread is how stockbrokers make their revenue. Below are the spreads for NZD/RON currency pairs in both ECN & STP brokers.

ECN: 35 pips | STP: 40 pips

Fees

A Fee is a payment we pay to the broker each time we open a spot. There is no additional payment charged on STP accounts, but a few extra pips are charged on ECN accounts.

Slippage

Slippage is the difference between the trader’s predicted price and the actual price at which the trade is implemented. It can appear at any given time but often arises when the market is moving fast and is volatile.

Trading Range in NZD/RON

The amount of money we earn or lose in a timeframe can be estimated using the trading range table. It is an example of the minimum, average, and maximum pip movement in a currency pair. This can be measured simply by using the ART indicator with 200-period SMA.

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.

NZD/RON Cost as a Percent of the Trading Range

The cost of trade generally differs on the broker and differs based on the volatility of the market. This is because the total cost also comprises slippage and spreads, excluding the trading fee. Below is the understanding of the cost variation in terms of percentages. The insights of it are discussed in the subsequent sections.

ECN Model Account

Spread = 35 | Slippage = 5 |Trading fee = 8

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 NZD/RON

Understanding the above tables is pretty simple. The percentage values are directly relative to the total cost of the trade. It is seen that the percentages are relatively high on the minimum column and vice versa. Now, coming to the best time to enter the market, it is when the volatility of NZD/RON is somewhere near the avg pip movement. Trading in such minutes will guarantee low costs as well as lower liquidity.

Speaking about timeframes, trading in 4H and Daily timeframe would be great, as the cost is manageable, and the trade is also not very time-consuming.

Another simple hack to cut down the cost is by trading using limit/pending orders instead of market orders. This will considerably lower costs on a trade because the slippage on the trade becomes 0. It many cases, the cost lowers by about 50% of the original value when we use limit orders.

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Forex Assets

How Expensive Is It To Trade The CHF/SAR Forex Exotic Pair?

Introduction

Introduction

Introduction

CHF/SAR is the acronym for the Swiss Franc against the Saudi Riyal. It is classed as an exotic currency pair as it usually has moderate trading volume. In this case, the Swiss Franc (on the left) is the base currency, and the Saudi Riyal (on the right) is the quote currency. The SAR (Saudi Riyal) is the official currency of Saudi Arabia, and one SAR is divided into 100 halalas.

Understanding CHF/SAR

To find out the comparative value of one currency, we require an additional currency to compare. If the base currency’s value goes down, the value of the quote currency moves up and contrariwise. If the market cost of this pair is 4.0742, then this amount of SAR is required to buy one unit of CHF.

Spread

Forex brokers have two distinct prices for currency pairs, which are classified as the bid and ask price. The bid price is the offering price, and ask is the buy price. The distinction between the ask and the bid price is known as the spread. The spread is how brokers make their income. Below are the spreads for CHF/SAR currency pairs in both ECN & STP brokers.

ECN: 9 pips | STP: 14 pips

Fees

A Fee is basically the compensation we pay to the broker each time we execute a spot. There is no compensation charged on STP account models, but a few additional pips are charged on ECN accounts.

Slippage

Slippage refers to the distinction between the trader’s anticipated price and the original price at which the trade is executed. It can occur at any time but often occurs when the market is fast-phased and volatile. Also, sometimes slippage occurs when we place a large number of orders at the same time.

Trading Range in CHF/SAR

The amount of money we will earn or lose in a specific timeframe can be evaluated using the trading range table. It is an illustration of the minimum, average, and maximum pip movement in a currency pair. This can be assessed simply by using the ART indicator with 200-period SMA. 

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.

CHF/SAR Cost as a Percent of the Trading Range

The cost of trade widely varies on the broker and differs based on the volatility of the market. This is because the total cost also includes slippage and spreads, excluding the trading fee. Below is the interpretation of the cost variation in terms of percentages. The understanding of it is discussed in the subsequent sections.

ECN Model Account

Spread = 9 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 9 + 8 = 22

STP Model Account

Spread = 14 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 14 + 0 = 19

The ideal way to trade the CHF/SAR

The CHF/SAR is an exotic-cross currency pair, and it is volatile. For example, the average pip movement on the 1H timeframe for this pair is ~37pips. From the earlier tables, it is clear that the higher the volatility, the lower is the cost of the trade. Nevertheless, this is not an added benefit, as it is risky to trade when the markets are incredibly volatile.

Trading in such timeframes will ensure low expenses just as reduced liquidity. It will also involve fewer costs by placing orders using limit/pending orders instead of market orders. This will substantially reduce the total cost with slippage being zero.

STP Model Account (Using Limit Orders)

Spread = 14 | Slippage = 0 | Trading fee = 0

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

While reading the above tables, if the ratios are larger, more significant are the trade costs. Likewise, if the proportions are small, lower are the costs. This can be inferred as the trading costs are more significant for low volatile markets and smaller for high volatile markets. I hope this article will support you to trade this pair in a much efficient way. Cheers!

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Forex Assets

Trading Costs Involved While Trading The ‘CHF/CNY’ Exotic pair

Introduction

Introduction

Introduction

CHF/CNY is the abbreviation for the Swiss Franc against the Chinese Yuan. It is categorized as an exotic-cross currency pair with moderate volatility and low trading volume. Here, the Swiss Franc (on the left) is the base currency, and the Chinese Yuan (on the right) is the quote currency. The Chinese Yuan(CNY) is also known as the Renminbi, which is also the official currency of China.

Understanding CHF/CNY

The market price of CHF represents the value of CNY that is compelled to purchase one CHF. It is quoted as 1 CHF per X CNY. If at all the market price of this pair is 7.5423, then this amount of CNY is required to buy one unit of CHF.  

Spread

The distinction between the asking price and the offering price is termed as the spread. ECN and STP account models will have different spread values. The estimated spread values of CHF/CNY pair in both the accounts are mentioned below:

ECN: 19 pips | STP: 24 pips

Fees

The fee is the commission that one pays for the trade. There is no commission charged on STP accounts, but a few additional pips are charged on ECN accounts.

Slippage

The variation between the trader’s expected price and the executed price offered by the broker is referred to as slippage. Its cost varies on the volatility of the market and the broker’s implementation speed.

Trading Range in CHF/CNY

The trading range is represented in a tabular form to understand the pip movement of a currency pair in different timeframes. These values help us determine the profit, which will be generated from trade. To obtain the worth, you will need to multiply the below pip value with the volatility value.

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.

CHF/CNY Cost as a Percent of the Trading Range

We can ascertain the cost variations in trade by implementing the total cost to the below-mentioned table. The values are achieved by identifying the proportion between total cost and volatility value, and they are represented in the form of a percentage.

ECN Model Account

Spread = 19 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 19 + 8 = 32

STP Model Account

Spread = 24 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 24 + 0 = 29

The Ideal way to trade the CHF/CNY

Understanding the above table is very simple. The proportion of the total cost of trade is directly relative to the value. It is seen that the rates are approximately high on the minimum section and the other way around. The perfect time to enter the market might be where CHF/CNY’s volatility is between the average pip movement.

To lower your risk, it is recommended to trade when the volatility is near the minimum levels. In this case, the volatility is low, and the costs are marginally high compared to the average and the max values. But, if your primary worry is on lowering costs, you may trade when the market volatility is close to the maximum values.

Trading in such timeframes will assure low expenses just as smaller liquidity. It will also include fewer costs by placing orders using limit/pending orders instead of market orders. This will substantially reduce the total cost with slippage being zero.

STP Model Account (Using Limit Orders)

Spread = 24 | Slippage = 0 | Trading fee = 0

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

I hope this article will aid you to trade this pair in a much efficient way. Cheers!

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Forex Basic Strategies

The Most Simple Yet Effective Scalping Strategies You Must Know In 2020

Introduction

Introduction

Introduction

The Forex market consists of are several types of traders. They are broadly classified based on the time frame traded. For example, swing traders use time frames like 1H or 4H, while positional traders analyze the 1D or 1W time frame. Similarly, there are “scalpers” who trade the 1-minute and the 5-minute time frames. Note that scalpers are different from day traders, as they do not consider the 15-minute or 1H time frame for their analysis.

What is Scalping in Forex?

Scalping is a type of real-time technical analysis, where traders make several trades in a small period. Scalping involves entering and exiting from the market within a few minutes and moving on with the subsequent trade. This type of traders aims for tiny profits rather than home runs.

Scalping is usually most popular among forex traders than those trading stocks and commodities. This is because the FX market is the most liquid and volatile market. Thus, traders make use of this benefit by extracting 10-20 from the market in a short time. Since scalping involves making of few pips on a trade, they are traded with big volumes.

Getting Started with Scalping in Forex

Now that we know the basics of Forex scalping, let’s discuss the analytical side of it and then understand some powerful scalping strategies as well.

Timeframe

The ideal time frame to the scalp is either 1-min or 5-mins. However, some traders get an outlook from the 15-min time frame too.

Take Profit and Stop Loss

The most critical part of scalping is to have a take profit and stop loss on every trade. Since you will be using the 1-min time frame, the profit or loss level should be within 5-10 pips. It is risky to keep the TP and SL greater than ten pips when the analysis is based on the 1-min time frame.

Volatility and Liquid

Volatility and liquidity are other vital points of consideration before scalping any market. Forex is indeed the best market to the scalp as it offers the needed volatility and liquidity. However, you must select the right pair to trade because not all currency pairs offer enough market volatility. There are pairs that barely move on the 1-min time frame, and thus traders must end up waiting several minutes on a trade. Hence, it is recommended to trade only major pairs and a few minor pairs.

Spread

Spread plays a major role in scalping as it greatly affects the P/L of the trade. For instance, let’s say the spread on EUR/USD is two pips. The pip value of the pair is $10. If one lot is traded, the expense of the trade would be $20. Now, if a trade yields you four pips, then the net profit would be $40 – $20 = $20. We infer that 50% of the profit gets deducted as a fee. Thus, scalpers always have an eye on the spread.

Forex Scalping Strategies

Scalping strategies are unlike strategies used by swing and positional traders. Scalpers do not wait for several confirmations before entering a trade. Instead, they aggressively enter after a couple of confirmations. Here are some scalping strategies made for non-conservative traders.

Scalping using Moving Average

This scalping strategy, two moving averages – the 5-period MA and the 20-period MA is used applied onto the 3-min charts. Let us understand the strategy with a couple of examples.

Firstly, we must have a look at the overall direction of the market. Note that this strategy is only for trending markets, not ranging markets. In the below chart of AUD/USD on the 3-minute time frame, we see that the market is in a clear downtrend.

Secondly, the five period MA must be below the 20-period MA. When the price action tries to break above five-period MA (yet below the 20-period MA) and falls back into MA, we can open short positions.

The stop-loss must be placed above the high of the candle that broke below five-period MA. One must exit the trade when the price reaches up to 1:1 risk-reward or at a profit of 5 pips.

Scalping using price-volume charts

Indicators are not a must to scalp in forex. Scalping is possible solely using price action concepts. And here is a strategy for the same. This strategy works on a small time frame used on any currency pair. However, we’ll be sticking to the 3-min time frame for all the strategies.

Below is the chart of AUD/USD on the 3-minute time frame. According to the strategy, we can take entry when the market breakthrough a range strongly with high volume. In the below example, we see that the price fiercely broke above the range with high volume too. This is a confirmation that the big buyer is back into the market. Thus, we can take a long position right after the candle closes above the range.

The stop-loss can be placed below the low of the candle that broke through the range and places the take profit at a 1RR ratio. Note that, the stop-loss and take profit must exceed above 10-12 pips.

Scalping using Support and Resistance

Scalping at support and resistance levels is the most popular technique in the forex industry. Yet most traders apply it illogically. Even though the textbook says to buy at the support and sell at resistance, it cannot be applied practically incorporated in the market as there is a pinch of psychology in it. According to this strategy, one must buy at support and sell at resistance only if there is a false breakout prior to it.

Consider the below chart of NZD/CAD on the 3-minute time frame. The gray ray represents the support level. It is seen that the price broke below the support thrice and came right back above it. Thus, one can enter when the price is holding above the resistance post the fake-out. The stop-loss and take-profit for all such trades much be a maximum of 5 pips.

We hope you found these strategies interesting and helpful. If you are an aggressive trader, do try them out and let us know the results in the comment section below.

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Forex Assets

Trading Costs Involved While Trading The ‘CHF/SEK’ Forex Exotic Pair

Introduction

Introduction

Introduction

The acronym of CHF/SEK is Swiss Franc, paired with the Swedish Krona. In this exotic Forex pair, CHF is the official currency of Switzerland and is also the fifth highly traded currency in the Forex market. In contrast, SEK stands for the Swedish Krona, and it is the official currency of Sweden.

Understanding CHF/SEK

In the Forex market, to ascertain the relative value of one currency, we need an alternate currency to assess. The market value of CHF/SEK helps us to understand the power of SEK versus the CHF. So, if the trade rate for the pair CHF/SEK is 9.8418, it means to buy 1 CHF, we need 9.8418 SEK.

CHF/SEK Specification

Spread

Spread is the variable between the ask-bit price that is set at the exchanges. Below are the spread values of the CHF/SEK currency pair in both ECN & STP accounts. The spread charges for ECN and STP brokers for CHF/SEK are given below.

ECN: 45 | STP: 50

Fees

For every place, a trader enters the broker charges some fee for it. A trader must know that this fee is applicable on ECN accounts only and not on STP accounts.

Slippage

Slippage is the price variation between the trader’s execution and at which the broker implemented the price. The variance is due to high market volatility and slow execution speed.

Trading Range in CHF/SEK

A trading range is the interpretation of the volatility in CHF/SEK in numerous timeframes. The values are attained from the Average True Range indicator. One can use the table as a risk management tool to distinguish the profit/loss that a trader is possessed.

Below is a table explaining the minimum, average, and max volatility (pip movement) on a variety of 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 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.

CHF/SEK Cost as a Percent of the Trading Range

The entire cost of the trade varies based on the volatility of the market. So, we must find out the instances when the costs are less to place ourselves in the market. Below is a table explaining variation in the costs based on the change in the market volatility.

Note: The percentage costs represent the comparative scale of costs and not the fixed costs on the trade.

ECN Model Account

Spread = 45 | Slippage = 5 | Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 45 + 8= 58

STP Model Account

Spread = 50 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 50 + 0 = 55

The Ideal way to trade the CHF/SEK

The two components a trader should consider while trading any security in the markets are – Volatility & Cost. With the help of the above tables, let us evaluate these two factors to trade the CHF/SEK ideally.

We can see that the pip difference is substantially high among the minimum volatility and the average volatility in every timeframe. For a day trader, the objective is to make revenue from the pip movement of the market. But, if there is barely any pip movement in the price, it becomes difficult to make profits out of the market. Therefore, it is perfect to trade when the volatility is at the average value.

The cost increases as the volatility decline, and they are inversely proportional to each other. In other words, highly volatile markets have the lowest costs. However, it is relatively risky to trade markets with higher volatility though the costs are low. Therefore, to maintain stability among the cost and volatility, traders may discover instances when the volatility is close to the average values or a little above it.

Categories
Forex Assets

Asset Analysis – Trading The CHF/BRL Exotic Forex Pair

Introduction

Introduction

Introduction

The abbreviation of CHF/BLR is Swiss Franc, paired with the Brazilian Real. In this pair, CHF is the native currency of Switzerland and is also the fifth vastly traded currency in the Forex market. Likewise, BRL stands for the Brazilian Real, and it is the official currency of Brazil. This is classified as an exotic Forex pair.

Understanding CHF/BRL

In the Forex market, to ascertain the relative value of one currency, we need another currency for comparison. When we buy a currency (recognized as the base currency), we are indirectly selling another currency (known as the quote currency). The market value of CHF/BRL helps us to comprehend the power of BRL against the CHF. So, if the trade rate for the pair CHF/BRL is 5.7715, it means to buy 1 CHF, we need 5.7715 BRL.

CHF/BRL Specification

Spread

Spread is the difference among the bid-ask price that is set at the exchanges. Below are the spread values of the CHF/BRL currency pair in both ECN & STP accounts. The spread charges for ECN and STP brokers for CHF/BRL pair are as follows:

ECN: 24 | STP: 29

Fees

For every spot, a trader enters the stockbroker charges a specific fee for it. Traders must know that this fee is charged only on ECN accounts and does not apply to STP accounts.

Slippage

Slippage is the price distinction between the broker executed price and the trader execution price. The difference is caused due to the market’s high volatility and slow execution speed.

Trading Range in CHF/BRL

A trading range is the explanation of the volatility in CHF/BRL in numerous timeframes. The values are attained from the Average True Range indicator. One can use the table as a risk management tool to distinguish the profit/loss that a trader is possessed.

Below is a table indicating the minimum, average, and max pip movement in several 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 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.

CHF/BRL Cost as a Percent of the Trading Range

The total cost of the trade changes based on the volatility of the market, hence we must number out the occasions when the costs are less to place ourselves in the market. The table below displays the variation in the costs based on the change in the market’s volatility.

Note: The ratio represents the relative scale of costs and not the fixed costs on the trade.

ECN Model Account

Spread = 24 | Slippage = 5 | Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 24 + 8= 37

STP Model Account

Spread = 29 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 29 + 0 = 34


The Ideal way to trade the CHF/BRL

With the help of the above tables, let us assess these two factors to the trade the CHF/BRL. Volatility and cost are two elements a trader must consider for trading any security in the Forex market.

In various timeframes, we can see the pip movement being very high between the minimum volatility and the average volatility. As a day trader, the aim is to make profits from the pip variation in the market. It becomes tricky to extract some profits from the market if there are no variations in the pip value.

When the cost goes higher, the volatility of the market decreases. In other words, the market with high volatility have minimal costs. To strike a balance between the volatility and the cost, traders should find an appropriate time when the volatility is close to the average values or slightly about it.

Additionally, traders can also reduce their total costs by placing ‘limit orders’ instead of ‘market orders.’ This will ultimately cut the slippage on the trade and consequently lower the total cost. In the below example, the total cost would decrease by five pips, which is a modest reduction for just altering the type of order execution.

STP Model Account (With Limit Orders)

Total cost = Slippage + Spread + Trading Fee = 0 + 29 + 0 = 29

Categories
Forex Assets

CHF/SGD – Trading Costs Involved While Trading This Forex Exotic Pair

Introduction

Introduction

Introduction

CHF/SGD is the short form for the Swiss Franc against the Singapore Dollar. It is classified as an exotic Forex currency pair. Currencies in the Forex market are always traded in pairs. The key currency in the pair (CHF) is the base currency, while the subsequent one (SGD) is the quote currency.

Understanding CHF/SGD

The market value of CHF/SGD determines the value of SGD required to buy one Swiss Franc. It is quoted as 1 CHF per X SGD. Therefore, if the market price of this pair is 1.4699, then these many Singapore Dollar units are necessary to buy one CHF.

Spread

The spread is the distinction between the bid-ask price. Generally, these two prices are set by the stockbrokers. The pip contrast is through which brokers generate revenue.

ECN: 12 pips | STP: 17 pips

Fees

The fee is the commission you pay to the broker on each spot you open. There is no fee charged on STP account models, but a few extra pips on ECN accounts.

Slippage

Slippage is the distinction between the price at which the trader implemented the trade and the actual price he got from the broker – this change based on the volatility of the market and the broker’s implementation speed.

Trading Range in CHF/SGD

The trading range table will help you ascertain the amount of money that you will win or lose in each timeframe. This table represents the minimum, average, and maximum pip movement in a currency pair.

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.

CHF/SGD Cost as a Percent of the Trading Range

The price of the trade fluctuates based on the volatility of the market. Therefore, the total cost involves slippage and spreads, excluding from the trading fee. Below is the interpretation of the cost difference in terms of percentages.

ECN Model Account

Spread = 12 | Slippage = 5 |Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 12 + 8 = 25

STP Model Account

Spread = 17 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 17 + 0 = 22

Trading the CHF/SGD

The CHF/SGD is not a volatile pair. For example, the average pip movement on the 1H timeframe is only 22 pips. If the volatility is higher, then the cost of the trade is low. However, it involves an elevated risk to trade highly volatile markets. Also, the higher/lesser the percentages, the greater/smaller are the costs on the trade. So, we can conclude that the costs are higher for low volatile markets and high for highly volatile markets.

To diminish your risk, it is advised to trade when the volatility is around the average values. The volatility here is low, and the costs are a slightly high matched to the average and the maximum values. But, if the priority is towards lowering costs, you could trade when the volatility of the market is near the maximum values with optimal risk management.

Advantage on Limit orders (STP Model Account)

For orders that are executed as market orders, there is slippage applicable to the trade. But, with limit orders, there is certainly no slippage applicable. Only the spread and the trading fees will be accounted for by calculating the total costs. Hence, this will bring down the cost considerably.

Spread = 17 | Slippage = 0 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 0 + 17 + 0 = 17

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Forex Assets

Asset Analysis – Trading The ‘CHF/PLN’ Forex Exotic Pair

Introduction

Introduction

Introduction

CHF/PLN is the abbreviation for the Swiss Franc alongside the Poland złoty. It is categorized as an exotic currency pair that usually has high volatility and low trading volume. Here, the CHF is the base currency, and the PLN is the quote currency. CHF is the official currency of Switzerland, whereas PLN is the national currency of Poland.

Understanding CHF/PLN

The current value of the pair represents the value of PLN that is corresponding to one CHF. It is quoted as 1 CHF per X PLN. For example, if the value of this pair is 4.1627, these many units of PLN are required to buy one Swiss Franc.

CHF/PLN Specification

Spread

In trading, the difference between the bid-ask price is described as the spread. Spread normally fluctuates from broker to broker. The estimated spread on ECN and STP accounts is given below.

ECN: 49 | STP: 54

Fees

There is a small fee or payment charged by the broker for each trade a trader does. This varies on both types of accounts and broker. There are zero fees charged on STP accounts, but a few extra pips are charged on ECN accounts.

Slippage

The difference between the cost at which the trader executed the trade and the cost he received from the broker is termed as Slippage. Fundamentally, Slippage hangs on two factors – Broker’s execution & market’s volatility

Trading Range in CHF/PLN

The trading range is a tabular interpretation of the minimum, average, and maximum pip movement in a different timeframe. Having expertise about this is necessary because it helps in handling risk as well as determine the appropriate times of the day to enter and exit a trade with marginal costs. Below is a table that illustrates the minimum, average, and maximum volatility (pip movement) on several 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 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.

CHF/PLN Cost as a Percent of the Trading Range

The number of pips the currency pair change in various timeframes is demonstrated in the table above. With this, we apply these values to get the cost percentage when the volatility is minimum, average, and maximum. This cost percentage will help us sort out an ideal time of the day to enter trades.

The understanding of the cost percentage is easy. If the percentage is above average, then the cost is higher for that specific timeframe and range. If the percentage is at a low level, then the cost is comparatively low for that timeframe and range. Note that, the total cost on a particular trade is calculated by combining the spread, Slippage, and trading fee.

ECN Model Account

Spread = 49 | Slippage = 5 | Trading fee = 8

Total cost = Slippage + Spread + Trading Fee = 5 + 49 + 8= 62 

STP Model Account

Spread = 54 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 54 + 0 = 59

The Ideal way to trade the CHF/PLN

There are specific times a trader must deal with their trade to decrease both hazard and cost on the trade. This can be made feasible by understanding the above tables. Entering and exiting trades during any time of the day is highly not advised.

The percentages are most elevated in the min column. This means the cost is fairly high when the volatility of the market is low. For instance, on the 1H timeframe, when the volatility is 27 pips, the cost percentage is 218.5%. Meaning, one must bear high costs if they open or close trades when the volatility is around 27 pips. So, ideally, it is proposed to trade when the market volatility is above the average mark.

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Forex Assets

Costs Involved While Trading The XBR/USD Asset Class

Introduction

Introduction

Introduction

BCO is an acronym for Brent Crude Oil, which is one of the two types of crude oil and is a benchmark for determining the price of oil, along with West Texas Intermediate (WTI) crude oil. BCO is also known by Brent Blend, Brent Oil, and London Brent. It is the benchmark for the majority of the crude oil from the Atlantic basin, which marks for two-thirds of the crude oil price traded internationally. In the market, it is traded with the ticker XBR/USD.

Understanding XBR/USD

Brent Crude is a commodity traded in barrels. The price of XBR/USD depicts the value of the US Dollar for 1 barrel of crude oil. It is quoted as 1 XBR per X USD. For example, if the market price of XBR/USD is 41.42, then it means that each barrel of crude oil is worth $41.42.

XBR/USD Specification

Spread

It is the basic difference between the bid price and the ask price. The spread on ECN and STP account model is as follows:

ECN: 11 | STP: 15

Fee

There is a fee (commission) for every position a trader opens. However, this fee is only on the ECN account, not the STP account.

Slippage

Slippage is the difference between the price intended by the trader and the price given by the broker. It occurs due to two factors:

  • Broker’s execution price
  • The volatility of the market

 Trading Range in XBR/USD

It is the representation of the volatility of the market in different time frames. The table values represent the minimum, average, and maximum pip movements in various time frames. 

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.

XBR/USD Cost as a Percent of the Trading Range

The following are two tables that represent the variation in the fee in terms of a percentage for different time frames. The percentage values are calculated by finding the ratio between the total cost and the volatility values.

ECN Model Account

Spread = 11 | Slippage = 5 | Trading fee = 5

Total fee = Spread + Slippage + Trading fee

Total fee = 11 + 5 + 5 = 21 (pips)

STP Model Account

Spread = 15 | Slippage = 5 | Trading fee = 0

Total fee = Spread + Slippage + Trading fee

Total fee = 15 + 5 + 0 = 20 (pips)

Trading the XBR/USD

Crude oil is a commodity that is rigorously traded in the market. Its volatility and liquidity are comparable to major and minor currency pairs, providing good opportunities for traders to participate in the market. The crude oil prices are driven by various fundamental factors and its Demand and Supply. The reflection of the same is seen on the charts. Thus, traders can apply technical analysis as well to forecast the price movements.

There is a fee on every trade you take with a forex broker. This fee is the same irrespective of the time frame you trade on. So, traders must place themselves in a position that will have a reasonable cost for a sufficient P/L. The trading range and the cost percentage table are the tools for it.

The larger the percentage value, the higher is the relative fee on the trade and vice versa. For example, let’s there are two traders – 1D and 4H trading with the same lot size. The 1D trader places a take profit to 200 pips, while the 4H trader places it at 100 pips. But the fee paid by both the traders is the same. But, seeing the relative fee, the 4H trader pays a higher fee than the 1D trader because his take profit is only 100 pips. Thus, the percentage values are higher in the 1D time frame than the 4H time frame.

There is another scenario where the relative cost changes based on the volatility of the market. In simple terms, the relative fee can vary even if a trader trades in the same time frame. Precisely, the relative fee is higher when the volatility of the market is around the minimum values. Therefore, to balance between the total fee and the P/L, one must trade when the market volatility is above the average volatility, irrespective of the time frame traded.

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Forex Assets

Asset Analytics – Trading The CHF/HKD Foreign Exchange Pair

Introduction

Introduction

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.  

 

Spread

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.

Trading Range in CHF/HKD

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

  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.

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

Spread = 35 | Slippage = 5 |Trading fee = 8

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!

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Forex Assets

Analyzing The ‘XAU/USD’ Financial Instrument & Determining The Trading Costs Involved

Introduction

Introduction

Introduction

Gold is a precious metal and one of the most valuable assets in the market. It is considered to be a safe haven instrument and a popular asset class for hedging positions during market uncertainty. XAU/USD is the abbreviation for the pair Gold Spot against the US Dollar. XAU is the ticker for Gold Spot. It can be traded against other fiat currencies like EUR and GBP as well.

Understanding XAU/USD

Gold Spot is an asset that is traded in troy ounces (Oz). The XAU/USD market price represents the value of the US Dollar for 1 ounce (Oz) of Gold. It is quoted as 1 XAU per X USD. For example, if the current market price of XAU/USD is 1730.50, it signifies that each ounce of Gold is worth the US $1730.5.

XAU/USD Specification

Spread

Spread is the difference between the bid price and the ask price. The spread usually varies based on the account type used for execution. The approximate spread on the gold spot on ECN account and STP account is as follows:

ECN: 100 | STP: 130

Fee

Typically, brokers do not charge any type of fee. But, on ECN accounts, there is some commission you must pay the broker for opening and closing a position. However, the fee is not significantly high.

Slippage

Due to the high market liquidity and slower broker’s execution speed, slippage occurs. It is the difference between the trader’s demanded price and the price at which the broker executed the trade. Slippage can occur both in favor and against the trader.

Trading Range in XAU/USD

The trading range is a tabular representation of the volatility in the market for several different time frames. It gives the minimum, average, and maximum volatility in the pair for different time frames.

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.

XAU/USD Cost as a Percent of the Trading Range

Cost as a percent of the trading range represents variation in the trade cost by considering the market’s time frame and volatility. Mathematically, it is the ratio of the volatility value and the total cost of the trade.

ECN Model Account

Spread = 100 | Slippage = 30 | Trading fee = 20

Total fee = Spread + Slippage + Trading fee

Total fee = 100 + 30 + 20 = 150 (pips)

STP Model Account

Spread = 130 | Slippage = 30 | Trading fee = 0

Total fee = Spread + Slippage + Trading fee

Total fee = 130 + 30 + 0 = 160 (pips)

The Ideal Timeframe to Trade XAU/USD

Gold is one of the oldest asset classes and one of the most reliable instruments as well. It is extensively traded in the market as most forex broker has XAU/USD available for trading. Its volatility and liquidity are no less than major currency pairs.

XAU/USD can be traded like any other foreign exchange pair. It, in fact, correlates with commodity currencies like AUD and NZD. Thus, traders use these two currencies in addition to USD, in order to analyze the pair. The same technical analysis applied to other markets can be used on the gold spot as well. However, the fundamentals do differ a little.

Coming to the costs, it technically remains the same for any time frame you trade. However, it relatively changes based on volatility and time frame. For example, a 1D trader who makes 2000 pips P/L on an average pays the same a 1H trader who makes 500 pips P/L on a trade. This is the reason the percentage values are higher in the 1H time frame than the 1D time frame.

Irrespective of the time frame you trade, you need to make sure that the market’s current volatility is above the average volatility. If you end trading when the volatility is at the minimum values, then you will have to pay the same costs for a trade that could not reach the target in your expected time.

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Forex Assets

Analyzing The ‘XMR/USD’ Crypto Fiat Pair

Introduction

Introduction

Introduction

Monero is a private and secure cryptocurrency that was launched 18th of April 2014 as a fork of ByteCoin. It is an open-source digital currency built on a blockchain, making it opaque. With Monero, the holder will have full control over their investment and funds, and nobody will have access to their balance and transactions.

Monero is traded in exchanges under the ticker XMR. It is under the top 20 in terms of market capitalization according to data from CoinMarketCap. It can be traded against USD as well as for cryptocurrencies Bitcoin, Ethereum, Tether, etc.

Understanding XMR/USD

The price of XMR/USD depicts the value of the US Dollar equivalent to one Monero. It is quoted as 1 XMR per X USD. For example, if the market price of XMR/USD is 64.67, then each XMR will be worth about 65 dollars.

XMR/USD specifications

Spread

Spread is the basic difference between the bid and the ask price of the cryptocurrency. These prices are put up by the clients and not exchange. Thus, the spread constantly varies in and across exchanges.

Fee

The types of fees in cryptocurrency exchanges vary from that of equity broker and forex brokers. Most crypto exchanges charge the following fees:

  • Execution fee (Taker or Maker) – twice, for opening and closing the trade
  • 30-day trading volume fee
  • Margin opening fee, if applicable

Example

  • Short 100 XMR/USD at $64.82
  • 30-day volume fee is $0
  • Order is executed as Taker
  • With Leverage

Total cost of the order = 100 x $64.82 = $6482

Assuming the taker fee to be 0.26%, the opening fee will be – $6482 x 0.26% = $16.85

Since the trade is opened with leverage, there is 0.02% of margin opening fee collected – $6482 x 0.02% = $1.29

If the position is squared off at $60.00, the total cost of closing will be – 100 x $60.00 = $6000.  The fee for the same can be calculated as – $6000 x 0.26% = $15.60

The algebraic sum of all the fee will yield the total fee as –

$16.85 + $1.29 + $15.60 = $33.74

Trading Range in XMR/USD

A trading range is the number of units the cryptocurrency pair moves in a specific time frame, represented in US dollars as the quote currency for the pair is USD. The values basically depict the volatility in different time frames.

The following table is the trading range for 100 quantities of XMR/USD.

Note: the above values are for trading 100 units of XMR/USD. If X units of the pair are traded, then the ATR values will be,

(ATR value from the table / 1,000) x X units

Procedure to assess ATR values

  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.

XMR/USD Cost as a Percent of the Trading Range

This cost as a percent represents relative the fee on the trade by considering the volatility and time frames. The percentage values are calculated by finding the ratio of each ATR value and the total fee.

Taker Execution Model

Opening = $16.85 | Margin fee = $1.29 | Closing = $15.60 | 30-day volume = $0

Total fee = Opening + Margin fee + Closing + 30-day volume = $16.85 + $1.29 + $15.60 = $33.74

Maker Execution Model

Opening = $10.37 | Margin fee = $1.29 | Closing = $9.6 | 30-day volume = $0

Total fee = Opening + Margin fee + Closing + 30-day volume = $10.37 + $1.29 + $9.6 + $0 = $21.26

*Assuming maker fee to be 0.16% the trade value.

Trading the XMR/USD

XMR is ranked 16 in market capitalization with a denominator over a thousand. It offers enough liquidity and volume for retail traders to participate in this pair. However, it is comparatively lesser than coins like Bitcoin, Ethereum, Ripple, Bitcoin Cash, etc.

As far as the analysis for this pair is concerned, it is no different from analyzing other cryptocurrencies and forex pairs. Hence, you can confidently apply those concepts in Monero as well.

The cost percentages in the above tables represent how expensive or cheap trade is going to be based on the profit you make or the loss you incur. The larger the percentage, the higher is the fee. Note that we are referring to the relative fee, not the absolute fee. Irrespective of the time frame and volatility, the fee will be the same but will vary relatively. For example, a short-term trader who makes $50 on trade must pay the same fee as a long-term trader who makes $1000.

Thus, to effectively reduce your relative costs, you must understand the volatility of the market. The concept is simple; one can make money only if there is enough movement in the market. Thus, before taking a trade, you must know the current volatility of the market using the ATR indicator. If the values are above the average, then you’re good to go. But, values near the minimum value indicates that there is not much movement in the market, and it could not reach your target point within the expected time.

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Forex Assets

XTZ/USD – Trading Costs Involved While Trading This Crypto-Fiat Pair

Introduction

Introduction

Introduction

Tezos is a platform that supports the development of DApps and smart contracts. It was created by an ex-Morgan Stanley analyst Arthur Breitman who launched an Initial Coin Offering (ICO) in 2017, raising $232 million. The next year, Tezos launched its beta network in July.

Tezos works by giving incentives to users willing to participate in the development of its protocol. Note that the complete network is decentralized. Users cannot mine Tezos coins as it based on the Proof-of-stake mechanism, unlike the Proof-of-Work in Bitcoin blockchain. Tezos is powered with its own XTZ token, which is created through a process called “baking.”

Understanding XTZ/USD

The price of XTZ/USD depicts the value of the US Dollar equivalent to on Tezos. It is quoted as 1 XTZ per X USD. For example, if the XTZ/USD’s market price is 2.9157, then each XTZ will be worth 2.9157 US dollars.

XTZ/USD specifications

XTZ stands 11th in terms of market capitalization on CoinMarketCap. Forex brokers typically allow trading of only the top 3 or top 5 for trading. So, most brokers do have XTZ enabled for trading. Thus, you will have to approach a cryptocurrency broker instead. They work quite differently from that of the forex broker. For example, instruments are traded in lots with forex brokers, unlike cryptocurrency exchanges.

Spread

Spread is the difference between the buying and selling price of the cryptocurrency. These prices are set by individual traders and not the exchange.  Thus, the spread always varies. Hence, we shall not be considering the spread in further calculations.

Fee

There are a number of fees charged by exchanges for trading cryptos. Below are some types of fees levied by most exchanges.

  • Execution fee (Taker or Maker)
  • 30-day trading volume fee
  • Margin opening fee, if applicable

Note that, the taker or maker fee is charged twice – for opening and closing the trade.

Example

  • Long 1,000 XTZ/USD at $2.9169
  • 30-day volume fee is 0.12%
  • Order is executed as Maker
  • Without Leverage

Total cost of the order = 1,000 x $2.9169 = $2916.9

Assuming the maker fee to be 0.16%, the opening fee will be – $2916.9 x 0.16% = $4.66

In addition, there is 0.12% fee for 30-day volume fee – $2916.9 x 0.12% = $3.50

Since the trade is opened without leverage, the margin opening fee will be $0.

If the order is closed at $2.9605, the total cost of closing will be – 1,000 x $2.9605 = $2960.5. The fee for closing will be:

$2960.5 x 0.16% = $4.73

Therefore, the total fee for this trade can be calculated as:

$4.66 + $3.50 + $4.73 = $12.89

Trading Range in XTZ/USD

The trading range in cryptocurrencies is different from that of foreign exchange. In forex, we calculated the pip movement using the ATR indicator and multiplied it with the pip value to find its worth. Since in cryptocurrency exchanges, there is no concept of pips. So, instead of representing the pip movement, we directly represent the value/worth of the price movement into the table.

The below table represents the value of the price movement for 1,000 quantities of XTZ/USD.

Note: the above values are for trading 1,000 units of XTZ/USD. If X units of the pair are traded, then the ATR values will be,

(ATR value from the table / 1,000) x X units

Procedure to assess ATR values

  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.

XTZ/USD Cost as a Percent of the Trading Range

Cost as a percent of the trading range represents the relative cost in terms of percentage. It is calculated by finding the ratio between the total cost and the ATR value. The comprehension of it shall be discussed in the subsequent topic.

Taker Execution Model

Opening = $7.58 | Margin fee = $0 | Closing = $7.69 | 30-day volume = $3.50

Total fee = Opening + Margin fee + Closing + 30-day volume = $7.58 + $0 + $7.69 + $3.50 = $18.77

*Assuming taker fee to be 0.26% the trade value.

Maker Execution Model

Opening = $4.66 | Margin fee = $0 | Closing = $4.73 | 30-day volume = $3.50

Total fee = Opening + Margin fee + Closing + 30-day volume = $4.66 + $0 + $4.73 + $3.50 = $12.89

Interpretation of Cost as a Percent of the Trading Range

Firstly, the trading range table, in simple terms, depicts the approximate dollar profit/loss on the trade. For instance, let us consider the average value on the 4H timeframe, which is 71.5. This means that one can gain or lose an average of $71.5 in a matter of 4 hours or so.

With respect to the percentage table, the value of the percentage signifies how expensive the costs are relative to the time frame and profit or loss generated. In other sense, the cost remains the same irrespective of the time frame you trade. For example, let us consider the average percentage on the 4H time frame, which is 18.03%, and the average on the 1H, which is 34.01%. In both cases, the overall is the same, but the cost relative to the profit made, the cost appears to be higher in the 1H time frame because the profit amount is lower than the 4H time frame because there is more price movement on the 4H time frame.

Trading the XTZ/USD

Tezos is under the top 15 in market capitalization according to the data from CoinMarketCap. This signifies that it is intensively traded in the market. Most of the buying and selling happens in the cryptocurrency exchanges.

There are two types of traders – short term and long term. A short term trader may trade the 1H, 2H, 4H, or the 1D time frame, while a long term trader may go with the 1W or 1M time frame. Also, irrespective of the time frame, one must trade when the market volatility is around the average, or maximum value to relatively reduce fees on the trade.

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Forex Assets

Analyzing The ‘ADA/USD’ Crypto-Fiat Asset Class

Introduction

Introduction

Introduction

Cardano is a decentralized platform allowing programmable transfers of value securely in a scalable fashion. It is the first blockchain created out from a scientific philosophy. It is also the first research-driven cryptocurrency that is built on the Haskell programming language.

Cardano is traded with the ticker ADA. It has a market capitalization of $2.2 billion. It can be bought, sold, and exchanged in several cryptocurrency exchanges. Apart from USD, it can be traded against other cryptos such as BTC, ETH, USDT, etc.

Understanding ADA/USD

The price of ADA/USD depicts the value of the US Dollar equivalent to one Cardano. It is quoted as 1 ADA per X USD. For example, if the market price of ADA/USD is 0.086112, then each ADA will be worth 0.086112 US dollars.

ADA/USD specifications

Forex brokers allow trading of only a few popular cryptocurrencies like Bitcoin, Ethereum, Ripple, etc. The other cryptos must be traded via cryptocurrency exchanges. And the working of these exchanges is different from that of forex brokers. As a major difference, cryptos are not traded in lots, in cryptocurrency exchanges.

Spread

Spread is the difference between the buying and selling price of the cryptocurrency. Crypto exchanges match these prices between induvial traders. Thus, there is no fixed spread. Also, typically, the spread is negligible in trading cryptos.

Fee

There are different fees charged by cryptocurrency exchanges for trading any coin. The various forms of fees include

  • Execution fee (Taker or Maker)
  • 30-day trading volume fee
  • Margin opening fee, if applicable

Note that the taker or maker fee will be considered for opening as well as closing the trade, and will depend on the value being traded.

Example

  • Short 10,000 ADA/USD at $0.085800
  • 30-day volume fee is $0
  • Order is executed as Taker

Total cost of the order = 10000 x $0.085800 = $858

Assuming the taker fee to be 0.26%, the opening fee will be – $858 x 0.26% = $2.23

Assuming the trade is opened with leverage, and the margin opening fee is 0.02%, the fee is calculated as – $858 x 0.02% = $0.17

If the order is closed at $0.095800, the total cost of closing will be 10,000 x $0.095800 = $958. And the fee for the same obtained is – $958 x 0.26% = $2.5

Thus, the total fee for the opening, maintaining and closing the trade would be equal to – $2.24 + $0.17 + $2.5 = $4.91

Trading Range in ADA/USD

The trading range represents the number of units moved in the pair in a specified time frame. For example, if 10,000 ADA/USD is traded and the average unit movement in the 1H time frame is 0.000778, then it means the pair will yield 10,000 x 0.000778 = $7.78.

Note: the above values are for trading 10,000 units of ADA/USD. If X units are traded, then the ATR values will be,

(Above ATR value / 10,000) x X units

Procedure to assess ATR values

  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.

ADA/USD Cost as a Percent of the Trading Range

The following tables depict the variations in total cost in terms of percentage based on the change in volatility and time frame.

Taker Execution Model

Opening = $2.23 | Margin fee = $0.17 | Closing = $2.5

Total fee = Opening + Margin fee + Closing = $2.24 + $0.17 + $2.5 = $4.91

Maker Execution Model

Opening = $1.37* | Margin fee = $0.17 | Closing = $1.53*

Total fee = Opening + Margin fee + Closing = $1.37 + $0.17 + $1.53 = $3.07

*Assuming maker fee to be 0.16% the trade value.

Trading the ADA/USD

Cardano stands 10th in CoinMarketCap in terms of market capitalization. Thus, making it a tradable pair in the crypto market. Almost all forex brokers do not ADA enabled for trading, so it must be traded through cryptocurrency exchanges. The fee structure here is quite different from forex brokers. However, the overall fee is more or less the same.

Comprehending the above tables, the magnitude of the percentage depicts how expensive/cheap a trade will be relative to the time frame and profit/loss. Let us understand this with an example.

The average values in 4H and 1D are 26.65% and 9.73%, respectively. The percentage in the 4H time frame is greater than the percentage in the 1D time frame. This means that the total cost for both is the same ($4.91), but relative to the generated profit, it is higher in the 4H time frame. A detailed reason for this can be given from the trading range table.

In the trading range table, the corresponding values are $11.52 and $31.55. This can be interpreted as, an average of $11.52 will be generated in trading the 4H time frame, and $31.55 when trading the 1D time frame. The fee in both cases is the same. Thus, we infer that the fee that is paid to generate $31.55, the same fee is deducted for generating $11.52. And hence, this is exactly what the higher percentage value depicts.

Reading through the row, the percentage values for a time frame is highest in the minimum column and least in the maximum column. So, if you’re are able to deal with higher volatility, it is ideal to trade when the volatility is around the average or maximum values. And if you cannot deal with the high volatility, you may trade the higher time frames to reduce the relative costs.

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Forex Assets

AUD/HRK – Analyzing The Costs Involved While Trading This Exotic Pair

Introduction

Introduction

Introduction

The abbreviation of AUD/HRK is Australian Dollar, paired with the Croatian Kuna. Here AUD is the official currency of Australia and is also the fifth most traded currency in the Foreign Exchange market. In contrast, HRK stands for the Kuna, and it is the official currency of Croatia. The Croatian National Bank issues this currency.

Understanding AUD/HRK

In the Forex market, to determine the relative value of one currency, we need another currency to compare. Here, when we buy a currency, which is known as the base currency and simultaneously sell the quote currency. The market value of AUD/HRK helps us to understand the strength of HRK against the AUD. So if the exchange rate for the pair AUD/HRK is 4.5571, it means to buy 1 AUD, we need 4.5571 HRK.

Spread

A spread is defined as the difference between the purchasing & selling price of a Forex pair. In simple words, it is the difference between the bid price and the ask price of an asset. Below is the spread charges for ECN and STP brokers for AUD/HRK pair.

ECN: 40 pips | STP: 43 pips

Fees

A Fee is the charges that we traders pay to the broker for executing a trade. Fees to a much depend on the type of broker(STP/ECN) we use.

Slippage

When we want to execute a trade at a particular market rate, but instead, the trade gets executed at a different rate, and that is because of the slippage. Slippage occurs when we counter a volatile market, and when we execute a large order at the same time.

Trading Range in AUD/HRK

The trading range here will determine the amount of money we will win or lose in a given amount of time. In the below table, we have the representation of the minimum, average, and maximum pip movement in a currency pair. Here we will use the ATR indicator that indicates the price movement in a currency pair. We will evaluate it merely by using it with 200-period SMA.

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 significant 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/HRK Cost as a Percent of the Trading Range

The cost of trade depends on the broker type and varies based on the volatility of the market. The overall cost of trade includes spread, fees, and sometimes slippage if the volatility is more. To decrease the cost of the trade, we can use limit orders instead of market execution.

ECN Model Account

Spread = 40 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 40 + 5 = 48

STP Model Account

Spread = 43| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 43 + 0 = 46

Trading the AUD/HRK

AUD/HRK is an exotic currency pair. As we can see, the average pip movement in 1hr is 133, which implies higher volatility. The higher the volatility, the higher is the risk and lower is the cost of the trade and vice versa. Taking an example, we can see from the trading range that when the pip movement is lower, the charge is high, and when the pip movement is high, the charge is low.

To reduce our costs of trade, we may place trades using limit orders instead of market orders. In the below table, we will see the representation of the cost percentages when limit orders are used. As we can see, the cost of slippage is zero. In doing so, the slippage will not be included in the calculation of the total costs. And this will help us in reducing the trading cost by a considerable margin. An example of the same is given below.

ECN Model Account (Using Limit Orders)

Spread = 40 | Slippage = 0 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 0 + 40 + 5 = 45

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Forex Assets

AUD/RON – What Should You Know Before Trading This Exotic Pair?

Introduction

Introduction

Introduction

The abbreviation of AUD/RON is Australian Dollar paired with Romanian Leu. Here AUD is the official currency of Australia and is also to be the fifth most traded currency in the Forex market. While RON stands for The Romanian leu, and it is the currency of Romania.

Understanding AUD/RON

In AUD/RON currency pairs, the first currency (AUD) is the base currency, and the second currency (RON) is the quote currency. In the Foreign Exchange market, we always buy the base currency and simultaneously sell the quote currency and vice versa. Here, the market value of AUD/RON helps us to understand the strength of RON against the AUD. So if the exchange rate of the pair AUD/RON is 2.9141, it means to buy1 AUD we need 2.9141 RON.

Spread

Forex brokers charge some commission on the trade we open, and that depends on the ask and the bid price by the broker. Spread is the difference between this Ask and Bid price. Every broker has different ask and bid prices. Below is the spread charges for ECN and STP brokers for AUD/RON pair.

ECN: 33 pips | STP: 35 pips

Fees

A Fee is the charges that we traders pay to the broker for opening a trade. This fee depends on the type of broker we use (STP/ECN).

Slippage

When we want to execute a trade at a particular market rate, but instead, the trade gets executed at a different rate. This is because of slippage. Slippage can take place at any time, but mostly we can counter a volatile market, and when we execute a large order at the same time.

Trading Range in AUD/RON

As a trader, our main motive should be to know the market volatility and avoid losses. The trading range here will determine the amount of money we will win or lose in a given amount of time. ATR is a technical indicator that indicates the price movement in a currency pair. In the below table, we have the representation of the minimum, average, and maximum pip movement in a currency pair. We will evaluate it merely by using the ATR indicator combined with 200-period SMA.

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 significant 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/RON Cost as a Percent of the Trading Range

The cost of trade depends on the broker type and varies based on the volatility of the market. The overall cost of trade includes spread, fees, and sometimes slippage if the volatility is more. To decrease the cost of the trade, we can use limit orders instead of market execution.

ECN Model Account

Spread = 33 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 33 + 5 = 41

STP Model Account

Spread = 35| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 35 + 0 = 38

Trading the AUD/RON

AUD/RON is an exotic currency pair. As we can see, the average pip movement in 1hr is 127, which shows the volatility is very high. Note, the higher the volatility, the higher is the risk and lower is the cost of the trade and vice versa.

Taking an example, we can see from the trading range that when the pip movement is lower, the charge is high, and when the pip movement is high, the charge is low. AUD/RON must be traded with proper risk management because of its volatile nature. If we have our strategy with adequate risk management, we can trade in a volatile market too.

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Forex Assets

Costs Involved While Trading The ‘AUD/PLN’ Exotic Pair

Introduction

Introduction

Introduction

The expansion of AUD/PLN is the Australian Dollar and Polish Zloty. Here, AUD is the official currency of Australia, and it is the fifth most traded currency in the Forex market. Hence, it is considered as a major currency. In contrast, the PLN (Polish złoty) is thinly traded, and it is the official currency of Poland.

Understanding AUD/PLN

In AUD/PLN currency pairs, the first currency (AUD) is considered the base currency, and the second (PLN) is considered the quote currency. In the foreign exchange market, we always buy the base currency and simultaneously sell the quote currency and vice versa. The market value of AUD/PLN helps us to understand the strength of PLN against the AUD. If the exchange rate of AUD/PLN is 2.7427, it means that we need 2.7427 PLN to buy 1 AUD.

Spread

In Forex, spreads are inevitable, and it is mainly controlled by the broker. Forex brokers have two prices for currency pairs: the bid and ask price. The bid is the price at which we sell an asset, and ask is the price at which we buy it. The difference between the ask price and the bid price is called the spread. Below are the ECN & STP spread values for AUD/PLN Forex pair.

ECN: 17 pips | STP: 20 pips

Fees & Slippage

A fee in Forex is the charges we pay to the broker for opening a trade. Mostly, these fees depend on the type of broker (STP/ECN) we use.

There are times when we want to execute a trade at a particular price, but instead, we end up executing it at a different price. This happens because of slippage. Slippage can take place at any time, but mostly it occurs, we can counter a volatile market.

Trading Range in AUD/PLN

As a trader, we must be aware of the risks involved before entering any trade. The trading range here will guide us about the amount of money we will win or lose in a given amount of time. In the below table, we have the representation of the minimum, average, and maximum pip movement in a currency pair. We will evaluate it by using the ATR indicator combined with 200-period SMA.

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 significant 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/PLN Cost as a Percent of the Trading Range

The cost of trade depends on the broker type and varies based on the volatility of the market. The total cost of trade involves spread, fees, and sometimes slippage if the volatility is more.

ECN Model Account

Spread = 17 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 17 + 5 = 25

STP Model Account

Spread = 20| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 20 + 0 = 23

Trading the AUD/PLN

AUD/PLN is an exotic currency pair that is rarely traded in the Forex exchange market. The average pip movement in 1hr is 63 pips, and that shows the volatility is at medium range.

Note – The higher the volatility, the higher is the risk, and the lower is the cost of the trade and vice versa. Taking an example, we can see from the trading range when the pip movement is more, the cost is low, and when the pip movement is low, the cost is high.

To reduce our trading costs, we may place trades using limit orders instead of market orders. In doing so, the slippage will not be included in the calculation of the total costs. This greatly helps us in reducing the overall cost of the trade. An example of the same is given below. In the below table, we can see how the trading costs have reduced comparatively.

ECN Model Account (But by using Limit Orders)

Spread = 17 | Slippage = 0 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 0 + 17 + 5 = 22

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Forex Assets

What Should You Know About The ‘XLM/USD’ Crypto Fiat Pair

Introduction

Introduction

Introduction

XLM is the abbreviation for Stellar. This cryptocurrency was founded in 2014 by Jed McCaleb. Stellar is also a payment technology that was created mainly to connect financial institutions and reduce the costs for cross-border transfers.

Stellar is actively traded in the market against fiat currencies and other cryptocurrencies. In this article, we shall be analyzing Stellar against the US dollar, abbreviated as XLM/USD.

Understanding XLM/USD

The price of XLM/USD depicts the value of the US Dollar that is equivalent to one Stellar. It is quoted as 1 XLM per X USD. For example, if the value of XLM/USD is 0.073264, then each stellar is worth 0.073264 US dollars.

Note: The price is considered from coinbase exchange.

XLM/USD Specifications

Spread

It is the athematic difference between the bid and the ask price managed by exchanges. It varies based on the type of execution model used by exchanges.

Spread on ECN: 450 pips

Spread on STP: 520 pips

Fee

A Fee is nothing but the commission on the trade. It is charged only on ECN accounts, and there is no fee on STP accounts.

Slippage

The difference between the trader’s intended price and the broker’s executed price is called slippage. It varies based on the volatility of the market and the exchange’s execution speed.

Trading Range in XLM/USD

The trading range is simply the illustration of the pip movement in a pair for different timeframes. With these values, a trader will know how long they have to wait for their trade to perform. Also, they can calculate approximate profit/loss on a trade beforehand.

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.

XLM/USD Cost as a Percent of the Trading Range

The following tables represent the total cost variations for ECN and STP accounts. It represents how the costs vary with the change in volatility.

ECN Model Account

Spread = 450 | Slippage = 70 |Trading fee = 50

Total cost = Slippage + Spread + Trading Fee = 70 + 450 + 50 = 570

STP Model Account

Spread = 520 | Slippage = 70 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 70 + 520 + 0 = 590

Trading the XLM/USD

It is a known fact that cryptocurrency is a 24-hour market and is traded even during the weekend. However, this does not mean we can enter any time to pull out a trade from it. Though many traders do this, it is not a professional approach. Using the volatility and cost variation values, we can determine the ideal times to trade this pair.

The pip values seem to look really large, but it doesn’t indicate high volatility. This pair is as volatile as other major cryptocurrencies. From the cost table, it can be ascertained that the values are large for lower volatilities that decease as the volatility increases. So, traders who are concerned with high costs can trade during the times when the volatility high. However, they must be cautious about the risk involved in it. On the other hand, traders who wish to have an equilibrium between the two, then they may trade when the volatility is around the average values.

Furthermore, trading via limit and stop orders also reduces costs by a good number. In doing so, the slippage will be taken off of the total costs. So, in our example, the total cost would reduce by 70, which is quite a decent reduction.

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Forex Assets

Asset Analysis – Exploring The GBP/AED Forex Currency Pair

Introduction

Introduction

Introduction

We all know that official currencies of the two countries are paired for being exchanged in reference to each other. In GBP/AED, GBP stands for the British pound sterling, and it is is the official currency of the United Kingdom. It is also the 4th most traded currency in the Forex Market and stands right after USD, EURO and YEN. Whereas the AED is known as the United Arab Emirates Dirham, and it is the official currency of the UAE.

GBP/AED

GBP/AED is the abbreviation of the Pound sterling against the Emirati Dirhams. In currency pairs, the first currency is the base currency, while the second currency is the quote currency. In this case, GBP is the base currency, and AED is the quote currency.

Understanding GBP/AED

In the Forex market, if the base currency’s value goes down, the value of the quote currency goes up and vice versa. Also, when we buy a currency pair, we buy the base currency and implicitly sell the quote currency.

The market value of GBP/AED determines the strength of AED against the GBP that can be easily understood as 1GBP is equal to how much AED. So if the exchange rate for the pair GBP/AED is 4.5748, it means that we need 4.5748 AED to buy 1 GBP.

Spread

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. Spread is basically a type of commission by which brokers make their money. Below are the ECN and STP spread values for the GBP/AED pair.

ECN: 27 pips | STP: 30 pips

Fees

Each time we place a trade, we need to pay some commission on it. A Fee is simply that commission we pay to the broker for opening a particular position. The fee also varies from the type of broker we use; for example, 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 mostly happens when the market is fast-moving and volatile. Also, it occurs at the times when we place a large number of orders at the same time.

Trading Range in GBP/AED

The trading range here is to measure the volatility of the GBP/AED pair. Whether we make a profit or loss in a given time period depends on the movement of a currency pair that can be assessed using the trading range table. It is a representation of the minimum, average, and maximum pip movement in a currency pair. This can be evaluated simply by using the ATR indicator combined with 200-period SMA.

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 significant 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.

GBP/AED Cost as a Percent of the Trading Range

The cost of trade mostly depends on the broker and 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 following sections. We will look into both the ECN model and the STP model.

ECN Model Account

Spread = 27 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 27 + 5 = 35

STP Model Account

Spread = 30| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 30 + 0 = 33

Trading the GBP/AED

The GBP/AED is an exotic-cross currency pair and is mostly ranging. The volatility of this currency pair is on the lower side. As seen in the Range table, the average pip movement on the 1-hour time frame is only 64. This clearly shows that if we trade in this pair, we will have to wait for a more extended period of time to get some good profit because of such a less movement in the pips.

Note that the higher the volatility, the lower the cost of the trade. However, this is not an advantage as it is risky to trade highly volatile markets. Let’s take, for example, in the 1M time frame, the Maximum pip range value is 3825, and the minimum is 923. When we compare the fees for both the pip movements, we find that for a 923 pip movement, the fee is 3.79%, and for 3825pip movement, fess is only 1.07%.

So, we can confirm that the prices are higher for low volatile markets and low for highly volatile markets. It is safe to trade when the volatility is around the average values, but experienced traders who strictly follow money management can trade the volatile markets as the cost of trade is less there. Cheers!

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Forex Assets

Understanding The GBP/HUF Exotic Currency Pair

Introduction

Introduction

Introduction

GBP stands for British Pound Sterling, and it is the 4th most traded currency in the Foreign Exchange market after USD, EURO and YEN. It is the official currency of the United Kingdom and some other countries like Jersey, South Georgia, and Guernsey. Whereas HUF stands for Hungarian forint, and it is the official currency of Hungary.

GBP/HUF

We know that the currencies in the Forex market are traded in pairs. GBP/HUF is the abbreviation for the Pound sterling against The Hungarian Forint. In this case, the first currency (GBP) is the base currency, and the second (HUF) is the quote currency.

Understanding GBP/HUF

To find the relative value of one currency in the Forex market, we need another currency to compare. If the value of the base currency goes down, the value of the quote currency goes up and vice versa. The market value of GBP/HUF determines the strength of HUF against the GBP. It can be easily understood as 1GBP is equal to how much of HUF. So if the exchange rate for the pair GBP/HUF is 414.425, it means we need 414.425 HUF to buy 1 GBP.

 

Spread

Forex brokers have two different prices for currency pairs: the bid and ask price. Here the “bid” price at which we can SELL the base currency, and The “ask” price is at which we can BUY the base currency. Hence, the difference between the ask and the bid price is called the spread. Some brokers, instead of charging a separate fee for trading, they already have the fees inbuilt in the spread. Below are the ECN and STP for the pair GBP/HUF.

ECN: 57 pips | STP: 60 pips

Fees

When we place any trade, there is some commission we need to pay to the broker. A Fee is simply that commission that we pay to the broker each time we execute a position. The fee also varies from the type of broker we use; for example, there is no fee on STP account models, but a few pips on ECN accounts.

Slippage

Slippage alludes to the difference between the expected price at which the trader wants to execute the trade and the price at which the trade is being executed. It can occur at any time but mostly happens when the market is fast-moving and volatile. Also, sometimes when we place a large number of orders at the same time.

Trading Range in GBP/HUF

The trading range is a tabular representation of the pip movement in a currency pair for different timeframes. Using this, we can assess the risk on a trade for each given timeframe. A trading range essentially represents the minimum, average, and maximum pip movement in a currency pair. This can be evaluated easily by using the ATR indicator combined with 200-period SMA.

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 significant 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.

GBP/HUF Cost as a Percent of the Trading Range

The cost of trade mostly depends on the broker and 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 following sections. We will be looking into both the ECN model and the STP model.

ECN Model Account

Spread = 57 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 57 + 5 = 65

STP Model Account

Spread = 60|Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 60+ 0 = 63

Trading the GBP/HUF

The GBP/HUF is an exotic-cross currency pair, and the volatility in this pair is decent. As seen in the Range table, the average pip movement on the 1-hour time frame is 205. Here in the GBP/HUF pair, HUF is an emerging currency. We must know that the cost of trade decreases ad the volatility od the pair increases. But this should not be considered as an advantage because it is risky to trade high volatile markets as the price keeps fluctuations.

For instance, in the 1-hour timeframe, the maximum pip range value in this pair is 343 pips, and the minimum pip range value is 27 pips. When we compare the fees for both the pip movements, we find that for 27 pip movement fees is 270.74%, and for 343 pip movement, the fess is only 18.95%.

So, we can confirm that the prices are higher for low volatile markets and high for highly volatile markets. Hence we must always try to make our entries and exits when the volatility is minimum or average than to that of maximum values. But if your preference is absolutely towards reducing your trading costs, you may trade when the volatility of the market is around the maximum values.

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Forex Assets

Asset Analysis – Exploring The ‘GBP/BND’ Exotic Pair

Introduction

Introduction

Introduction

The abbreviation of GBP is the Great British Pound, and this currency is mostly known as pound sterling across the globe. It is one of the most-traded currencies in the Forex market and stands at the fourth position right after USD, EUR, & JPY. Whereas the abbreviation of BND is the Brunei Dollar, and it has been the currency of the Sultanate of Brunei since 1967. The Monetary Authority of Brunei Darussalam issues the Brunei Dollar.

GBP/BND

In the Forex market, currencies of the two countries are paired for being exchanged in reference to each other. GBP/BND is the abbreviation for the Pound Sterling against The Brunei Dollar. In this case, the first currency (GBP) is the base currency, and the second (BND) is the quote currency. The GBP/BND is classified as an exotic-cross currency pair.

Understanding GBP/BND

In the Forex, one currency is quoted against the other. To find out the relative value of one currency, we need another currency to compare. If the value of the base currency goes down, the value of the quote currency goes up and vice versa.

The market value of GBP/BND determines the strength of BND against the GBP. This can be easily understood as 1GBP is equal to how much BND. So if the exchange rate for the pair GBP/BND is 1.7660, it means 1GBP is equal to 1.7660 BND.

Spread

Forex brokers set two different prices for the currency pairs – Bid & Ask prices. Here the ‘bid’ price is at which we can sell the base currency, and the ‘ask’ price is at which we can buy the base currency. The difference between the ask and the bid price is called spread. The spread is how brokers make their money. Some brokers, instead of charging a separate fee for trading, they already have the fees inbuilt in the form of spread. Below are the ECN & STP spread values for GBP/BND Forex pair.

ECN: 12 pips | STP: 15 pips

Fees

A Fee is simply the commission we pay to the broker each time we execute a position. There is no fee on STP account models, but a few pips of the trading fee is charged on ECN accounts.

Slippage

Slippage refers to the difference between the expected price at which the trader wants to execute the trade and the price at which the trade gets executed. The slippage can occur at any time but mostly happens when the market is fast-moving and volatile in nature. Slippage also occurs when we place a large number of orders at the same time.

Trading Range in GBP/BND

The amount of money we will win or lose in a given time can be assessed by using the trading range table. It is a representation of the minimum, average, and maximum pip movement in a currency pair. This can be evaluated easily by using the ART indicator combined with 200-period SMA.

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 significant 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.

GBP/BND Cost as a Percent of the Trading Range

The cost of trade mostly depends on the type of broker we chose and also varies based on market volatility. 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 following sections.

ECN Model Account

Spread = 12 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 12 + 5 = 20

STP Model Account

Spread = 15 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 15 + 0 = 18

Trading the GBP/BND

The GBP/BND is an exotic-cross currency pair and it is typically a Ranging market. The average pip movement of this pair on the 1H timeframe is 55 pips. Since the market is ranging, the volatility is less and the trading costs are relatively high while trading the GBP/BND pair. Always remember that cost of trade increases as the volatility decreases and vice versa.

Conservative traders who don’t mind spending more on trading fees can trade this pair on all the timeframes as the volatility is moderate. Comprehending the above tables, we should note that the costs on the trade are high when the volatility is less. But traders who don’t prefer spending more on trading costs can trade this pair when the volatility of the market is around the maximum values. Cheers!

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Forex Assets

Asset Analytics – Analyzing The GBP/DKK Currency Pair

Introduction

Introduction

Introduction

GBP Pound sterling, also known as the pound, is the official currency of the United Kingdom and many others. The sterling is the fourth most-traded currency in the forex market. Where in DKK is known as The krone and sometimes Danish crown. It is the official currency of Denmark, Greenland, and the Faroe Islands.

GBP/DKK is the abbreviation for the Pound sterling against the Danish crown. In the Forex, one currency is quoted against the other. Here, the first currency(GBP) is the base currency, and the second(DKK) is the quote currency. The GBPDKK is classified as exotic-cross currency pair.

Understanding GBP/DKK

In Forex, to find out the relative value of one currency, we need another currency to compare. The market value of GBPDKK determines the strength of DKK against the GBP that can be easily understood as 1GBP is equal to how much DKK, so if the exchange rate for the pair GBPDKK is 8.3430. It means that we need 8.3430DKK to buy 1 GBP.

If the value of the base currency goes down, the value of the quote currency goes up and vice versa.

Spread

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.

ECN: 39 pips | STP: 42 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 mostly happens when the market is fast-moving and volatile. Also, sometimes when we place a large number of orders at the same time.

Trading Range in GBP/HKD

The amount of money you 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. This can be evaluated simply by using the ART indicator combined with 200-period SMA.

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 significant 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.

GBP/DKK Cost as a Percent of the Trading Range

The cost of trade mostly depends on the broker and 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 following sections.

ECN Model Account

Spread = 39 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 39 + 5 = 47

STP Model Account

Spread = 42 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 42 + 0 = 45

Trading the GBP/DKK

The GBP/DKK is an exotic-cross currency pair and is a volatile market. For instance, the average pip movement on the 1H timeframe is only 333 pips. DKK is considered to be an emerging pair.

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 prices are higher for low volatile markets and high for highly volatile markets.

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.

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Forex Assets

Exploring The GBP/HKD Forex Exotic Currency Pair

Introduction

Introduction

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.

Spread

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.

Trading Range in GBP/HKD

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

  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.

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 = 33 | Slippage = 3 |Trading fee = 5

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.

Advantage from Limit orders

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.

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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

What Should You Know Before Trading The EUR/RON Forex pair

Introduction

Introduction

Introduction

The abbreviation of the Euro Area’s euro against the Romanian Leu is written as EUR/RON. This pair is classified as an exotic currency pair. The volume traded in this pair is pretty low. Here, the EUR is the base currency, and the EGP is the quote currency.

Understanding EUR/RON

The value of the EUR/RON determines the value of RON equivalent to one EUR. It is quoted as 1 EUR per X RON. For example, if the value of EUR/RON is 4.8512, then exactly 4.8512 RON is required to buy one Euro.

Spread

The difference between the bid and the ask price for that currency pair is referred to as the spread. The spread is different on ECN and STP accounts.

ECN: 75 pips | STP: 80 pips

Fees

The fee is simply the commission on the trade. One has to pay a few pips of fee on the trade for entering as well as exiting the trade. However, this is only on ECN accounts. On STP accounts, there is no fee.

Slippage

The slippage is the difference between the trader’s required price for execution and the price the broker actually gave the trader. There is this difference due to the volatility of the market and the broker’s execution speed.

Trading Range in EUR/RON

A Trading range is the illustration of the pip movement of a currency pair in different timeframes. The values are obtained from the average true indicator. The volatility values help us in determining the number of pips our trade can move in a given 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/RON Cost as a Percent of the Trading Range

With the volatilities values obtained above, we can even determine the variation in the cost of the trade. Below are the cost variation tables for ECN and STP accounts.

ECN Model Account

Spread = 75 | Slippage = 5 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 5 + 75 + 3 = 83

STP Model Account

Spread = 80 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 80 + 0 = 85

Trading the EUR/RON

Which timeframe to trade?

Consider the below chart on the 1H timeframe. We can clearly see that the volatility in this pair is very high. There is hardly any movement for a few hours, but a big spike up/down suddenly. And this type of movement is very risky for business. Hence, it is recommended to avoid trading smaller timeframes of this pair.

Nonetheless, considering the 1D chart of EUR/RON, we can see that the volatility is decent enough. Hence, this becomes a tradable timeframe for us. In fact, any timeframe above the daily can be traded efficiently.

How to manage costs?

In the trading cost table, we can see that the percentage values are large in the min column and small in the max column. This means that the costs are high for low volatilities and small for high volatilities. So, to have a balance between the volatility and costs, one may trade when the volatility is around average values.

Furthermore, trading through limit orders is another way to reduce costs. In doing so, the slippage on the trade will not be applied to the total costs.