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Forex Assets

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

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

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

Everything About Trading The ‘AUD/NOK’ Forex Exotic Pair

Introduction

The abbreviation of AUD/NOK is the Australian Dollar and the Norwegian Krone. AUD is the official currency of Australia and many others like Christmas Island, Cocos Islands, and Norfolk Island. This currency is also proven to be the fifth most traded currency in the Forex market right after USD, EURO, JPY, and GBP. Whereas the NOK stands for Norwegian Krone, and it is the official currency of Norway and its dependent territories.

Understanding AUD/NOK

In the Forex, Currency pairs are the national currencies from two countries coupled for being exchanged in reference to each other. The first currency here is the base currency, and the second currency is the quote currency. Here, the market value of AUD/NOK helps us to understand the strength of NOK against the AUD. So if the value for the pair AUD/NOK is 6.5921, it means we need 6.5921 NOK to buy 1 AUD.

Spread

All Forex brokers have two different prices for currency pairs: selling price and buying price, and they are known as bid and ask price. Spread is the difference between the selling price and the buying price. Below is the spread for ECN and STP brokers for the AUD/NOK pair.

ECN: 50 pips | STP: 53 pips

Fees & Slippage

A Fee in Forex is the commission we need to pay to the broker for executing a particular position. If we subtract the trader’s expected price with the actual price at which the trade is executed, we get the Slippage. It occurs when the volatility of the currency pair is high. It may also occur when a large number of orders are placed at the same time.

Trading Range in AUD/NOK

Volatility is a basic measure of risk every trader should be well aware of before entering the market. Whether we have a profit or loss in a given time period relies on the pip movement of that currency pair. This can be assessed using the trading range table. The trading range here represents the minimum, average, and maximum movement of the pip in AUD/NOK.

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/NOK Cost as a Percent of the Trading Range

We must be aware of the over cost we will pay to trade a currency pair. The cost of trading a currency pair depends mostly on the volatility and also the broker, which we use. The overall cost here involves spread, slippage, and the trading fee. Below we will see the calculation of the cost variation in terms of percentages.

ECN Model Account

Spread = 50 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 50 + 5 = 58

STP Model Account

Spread = 53 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 53 + 0 = 56

Trading the AUD/NOK

We are much aware of major and minor currency pairs, but there are few currencies that are less traded in the foreign exchange market. These currencies are called exotic-cross currency pairs. AUD/NOK is one such exotic pairs. As we see in the trading range chart, the average pip movement of AUD/NOK is 205, and by this, we can conclude that AUD/NOK is a volatile market.

To have a better understanding of the volatility, we will try to understand this with the help of an example. In the 1H time frame, the average pip movement is 205, and the cost percentage is 28.29%. Where in the minimum pip movement in 1hr is 81 and trading, it will cost us 71.60%.

This shows us that higher the volatility lesser is the cost of a trade. But trading in a volatile market involves risk as the movement of the pips is very fast. However, we can trade a volatile market if we follow proper money management rules.

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Forex Assets

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

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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Trading The ‘GBP/BRL’ Exotic Pair & Comprehending The Costs Involved

Introduction

GBP/BRL is the abbreviation for the Pound sterling against the Brazilian real. As we know, GBP is the official currency of the United Kingdom, Jersey, Guernsey, and others, whereas BRL is the official currency of Brazil. In Forex trading, currencies are always traded in pairs. The primary currency in the pair is known as the base currency, while the second one is the quote currency.

Understanding GBP/BRL

To find the relative value of one currency, we compare that with another currency in the Forex market. The market value of GBP/BRL helps us to understand the strength of BRL against the GBP. If the exchange rate of the pair GBP/BRL is 6.5415. It means that to buy 1 GBP, we need 6.5415 BRL.

Spread

Forex brokers have two prices for currency pairs. They are the bid and ask prices. The difference between this bid and the ask prices is known as the spread, and this is how Forex brokers profit for the services they provide. Some brokers include the costs in the buy and sell prices of the currency pairs instead of charging spreads. Below are the ECN and STP spread values for the pair GBP/BRL.

ECN: 41 pips | STP: 44 pips

Fees

A Fee is a commission we pay to the broker for executing our trades. It differs for different types of brokers. For instance, there is no fee charged by the STP brokers, but for ECN accounts, a few pips are charged a fee.

Slippage

It is the difference between the expected price and the price at which the trade gets executed. Slippage can occur at any time, but it mostly happens when the market is highly volatile.

Trading Range in GBP/BRL

Being aware of the volatility of a particular currency pair before placing the trade is very important for every aspiring trader. The trading range here is useful to measure the volatility of the GBP/BRL pair. The amount of money we will win or lose in a given amount of time can be assessed using the below trading range table.

Procedure to assess Pip Ranges

  1. Add the Average True Range indicator on your price chart
  2. Then, set the period to one
  3. Add a 200-period Simple Moving Average to the ATR indicator
  4. Shrink the chart to assess a significant period
  5. Select the desired timeframe
  6. Measure the floor level and set this value as the minimum
  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/BRL Cost as a Percent of the Trading Range

The cost of trade depends on the broker type and varies based on market volatility. The total cost of trade involves spreads and slippage apart from the trading fee.

ECN Model Account

Spread = 41 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 41 + 5 = 49

STP Model Account

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

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

Trading the GBP/BRL

There are a few currencies that are hardly traded in the foreign exchange market. These currencies are called exotic-cross currency pairs, and the GBP/BRL is one such exotic pair.

These pairs have less market depth, less volume, and are also illiquid. GBP/BRL is a trending market. Further, the average pip movement on the 1H timeframe is 198 pips, which is considered to be volatile. Higher the volatility, lower is the cost on a trade. However, this should not be considered an advantage as it is risky to trade in highly volatile markets.

Let’s take, for example, in the 4H time frame. The Maximum pip range value is 816, and the minimum is 102. When the comparison of the fees for both the pip movements is made, we find that for 102pip movement, fess is 46.08%. But for the 816pip movement, fess is only 5.76%.

So, we can confirm that the prices are higher for low volatile markets and low for highly volatile markets. We recommend trading when the volatility is around the average values. Experienced traders who strictly follow money management can trade in a highly volatile market.

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Analyzing GBP/BGN Exotic Pair & Comprehending The Costs Involved

Introduction

GBP stands for the British pound sterling, which is sometimes also known as the Pound. It is the 4th most traded currency in the Foreign Exchange market after USD, EURO and YEN. Whereas, BGN is the abbreviation of the Bulgarian lev, and it is the official currency of Bulgaria.

Understanding GBP/BGN

In Forex, the currencies are traded in pairs. In this case, GBP is the base currency, and BGN is the quote currency. Generally, if the value of the base currency goes up, the value of the quote currency goes down and vice versa. The market value of GBP/BGN determines the strength of BGN against GBP. It can be easily comprehended as 1GBP is equal to how much of BGN. So, if the exchange rate of GBP/BGN is 2.2409, to buy 1GBP, we need 2.2409 BGN.

Spread

Spread is the athematic difference between the bid and ask prices. Here, the bid is the selling price, whereas ask is the buying price of the currency pair. So basically, the spread is a type of commission brokers make for the services they provide. Below are the ECN and STP spread values for the pair GBP/BGN.

ECN: 19 pips | STP: 22 pips

Fees

It is obvious that we need to pay some commission to the broker every time we place a trade. A Fee is simply that commission we pay to the broker for opening a particular position. This fee varies from the type of broker we use. For example, there is no fee charged for STP account models, whereas a few pips are charged by ECN brokers.

Slippage

Slippage is referred to as the difference between the expected price at which the trader wants to buy/sell a currency pair and the price at which the trade is executed in real-time. It is important to know that slippage can occur at any time. However, it mostly happens when the market is extremely volatile.

Trading Range in GBP/BGN

Whether we make a profit or loss in a given time period depends on the movement of a currency pair. This can be assessed using the trading range table that is given below. It is basically a representation of the min, avg, and the maximum pip movement in a Forex currency pair. Evaluating the volatility of the market before taking the trade is the most important thing to do. The trading range here is to measure the volatility of the GBP/BGN 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 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/BGN Cost as a Percent of the Trading Range

Most of the time, the cost of trade depends on the type of broker we choose. This varies based on the market’s volatility. The total cost involves the costs incurred from slippage and spreads along with the trading fee. Below we have discussed the cost variation in terms of percentages. Let’s look into both the ECN and the STP models.

ECN Model Account

Spread = 19 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 19 + 5 = 27

STP Model Account

Spread = 22| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 22 + 0 = 25

Trading the GBP/BGN

The GBP/BGN is an exotic-cross currency pair and is a low volatile market. As seen in the Range table, the average pip movement on the 1-hour time frame is only 36. This clearly shows that if we trade this pair, we will have to wait for a more extended period to get some good profit as the pip movement is very less.

On any given day, if the market volatility is high, the cost of the trade is lower and vice-versa. However, this shouldn’t be considered as an advantage always because more the volatility, the riskier is our trade.

For instance, in the 1M time frame, the maximum pip range value is 1559, and the minimum is 336. When we compare the fees for both the pip movements, we find that 8.04% is the fee for the former, and it is only 1.73% for the latter. Hence we can infer that the prices are higher for low volatile markets and low for highly volatile markets.

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Exploring The GBP/XPF Exotic Forex Currency Pair

Introduction To GBP/XPF

The abbreviation of GBP/XPF is British Pound vs. the French Pacific Franc. Here GBP is the official currency of the United Kingdom, and many others, it is also proven to be the fourth most traded currency in the forex market after USD, EURO, and JPY. In contrast, The CFP franc is the currency used in French overseas.

Understanding GBP/XPF

We know that in currency pairs, the first currency is the base currency, and the second currency is the quote currency. Here, the market value of GBP/XPF helps us to understand the strength of XPF against the GBP. So let’s take if the exchange rate for the pair GBP/XPF is 135.984, it means we need 135.984 XPF to buy 1 GBP.

Spread

We have two different prices for currency pairs in forex, 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 BUY the base currency. The difference between the ask price and the bid price is called the spread. Below is the spread for ECN and STP broker for the GBP/XPF pair.

ECN: 52 pips | STP: 55 pips

Fees

A Fee in forex is simply the commission we need to pay to the broker for opening a particular position. The fees depend on the type of broker we use. Like for example, we don’t have any fees for ECN, but we have some for STP.

Slippage

Slippage is the difference between the trader’s anticipated price and the actual price at which the trade is executed. It mostly occurs when the volatility of the currency pair is high and also, sometimes, when a large number of orders are placed at the same time.

Trading Range in GBP/XPF

Volatility is an essential factor that every trader should take into consideration before entering the market. The amount of capital we will win or lose in a given amount of time can be evaluated using the trading range table. Here, the trading range 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/XPF Cost as a Percent of the Trading Range

The cost of trade depends mostly on the broker and also varies based on the volatility of the market. We have various costs involved in the overall trading cost that includes slippage, spreads, and sometimes the trading fee. Below is the calculation of the cost variation in terms of percentages. The conception of it is discussed in the following sections.

ECN Model Account

Spread = 52 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 52 + 5 = 60

STP Model Account

Spread = 55| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 55 + 0 = 58

Trading the GBP/XPL

There are some currencies that are very less traded in the foreign exchange market. These currencies are called exotic-cross currency pairs. GBP/XPL is one such exotic currency pairs. Further, the average pip movement on the 1H timeframe is only 14 pips, which is considered to be very less volatile.

We also have to note that if we trade in a low volatile market, our trading will be very expensive. However, It is recommended to trade in a currency pair with medium volatility. To comprehend this better, we will try to understand this with the help of an example.

As we can see in the 1M time frame, the Maximum pip range value is 865, and the minimum is 217. Now when we compare the trading cost in accordance with the pip movement, we note that in 217pip movement fess is 26.73%, and for 865pip movement, fess is only 6.71%. So overall we can conclude that trading this pair will be very expensive.

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Analyzing The GBP/SAR Exotic Currency Pair

Introduction

In the Forex market, currencies are traded in pairs, and one currency is always quoted against the other. The abbreviation of GBP/SAR is British Pound Saudi Riyal. Here, the first currency GBP is the base currency, and the second one SAR is the quote currency.

Understanding GBP/SAR

We compare the value of one currency to another, and hence when we buy a currency pair, we are essentially buying the base currency and selling the quote currency. The market value of GBP/SAR determines the strength of SAR against the GBP, so if the exchange rate for the pair GBP/SAR is 4.7167, it means we need 4.7167 SAR to buy 1 GBP.

Spread

Trading the Forex market usually does not involve in spending a lot of commissions like the Stock market. Here, Forex brokers make a profit through spreads. The difference between the Bid and the Ask prices of an asset is called the spread. Some broker has the cost inbuilt into the buy and sell prices of the currency pair we want to trade instead of charging a separate fee. Below are the spread values of ECN and STP brokers for the GBP/SAR pair.

ECN: 40 pips | STP: 44 pips

Fees

A Fee is simply the charges we pay to the broker for executing a particular trade. The fee varies from the type of broker we use. For example, the fee on the STP account model is zero, but we can expect a few pips on ECN accounts.

Slippage

Slippage is the implementation of a trade at a price different from that requested by a trader. Slippage can either be positive (be additional profit) or negative (additional loss) and Mostly occurs when the market is volatile.

Trading Range in GBP/SAR

The trading range is used here is to measure the volatility of the GBP/SAR pair. The amount of money we will win or lose in a given amount of time can be assessed using the trading range table. The minimum, average, and maximum pip movement of the currency pair is represented 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 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/SAR Costs as a Percent of the Trading Range

The cost of trade depends on the broker and differs according to the volatility of the market. This is because the trading cost includes slippage, fees, and the spread. The cost of variation in terms of percentage is given below. We will look into both the ECN model and the STP model.

ECN Model Account

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

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

STP Model Account

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

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

Trading the GBP/SAR Forex pair

The GBP/SAR is an exotic-cross currency pair and is a low volatile market. Looking at the pip range table, the average pip movement on the 1H timeframe is only 62 pips. Hence, The volatility of this currency pair is on the lower side. We know that the higher the volatility, the lower will be the cost to execute the trade. However, this is not an advantage as trading in a volatile market involves more risk.

Let’s take, for example, in the 1M time frame, the Maximum pip range value is 3952, and the minimum is 896. When we compare the trading fees for both the pip movements, we note that for 896pip movement fess is 5.36%, and for 3952pip movement, fess is only 1.21%. As we can conclude from the above example, trading the GBP/SAR currency pair will be a bit expensive.

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Forex Assets

Trading The EOS/USD Crypto-Fiat pair & Understanding The Costs Involved

Introduction

EOS is a blockchain-based cryptocurrency, as well as a platform for decentralized app execution. This blockchain was developed despite the existence of Bitcoin and Ethereum to solve the problem of speed and scalability.

Understanding EOS/USD

The price of EOS/USD represents the value of the US Dollar equivalent to one EOS. It is quoted as 1 EOS per X USD. So, if the market price of EOS/USD is 2.5290, these many dollars are required to buy one EOS.

EOS/USD specifications

Spread

The difference between the bid & ask prices is known as spread. It changes with the execution model used brokers. Below are the spreads for both ECN & STP models for EOS/USD pair.

Spread on ECN: 10 pips | Spread on STP: 13 pips

Fee

A Fee is basically the commission on the trade. Note that there is a fee on ECN accounts, not STP.

Slippage

Due to high market volatility and the broker’s slower execution speed, slippage occurs. It is a difference in the price intended by the trader and price executed by the broker.

Trading Range in EOS/USD

The trading range is basically a tabular representation of the pip movement in EOS/USD for different timeframes. These numbers can be used traders as a risk management tool as determines the approx. profit/loss that can be made on a trade.

Procedure to assess Pip Ranges

  1. Add the Average True Range indicator to your price chart
  2. Then set the period to one
  3. Add a 200-period Simple Moving Average to this indicator
  4. You can assess a large time period by shrinking the price chart
  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.

EOS/USD Cost as a Percent of the Trading Range

The total cost comprising of the spread, slippage, and trading fee, changes with the volatility of the market. Hence, it is necessary for traders to position themselves to avoid paying high costs.

Below is a table representing the variation in the costs for different values of volatility.

ECN Model Account

Spread = 10 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 10 + 5 = 18

STP Model Account

Spread = 13 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 13 + 3 + 0 = 16

Trading the EOS/USD

The volatility and liquidity in this pair are similar to coins like Bitcoin and Ethereum. Hence, this makes EOS/USD a tradable pair. The spread in this pair is between 10-15 pips, which is extremely less compared to its volatility. Due to this, the costs reduce significantly. The highest cost percentage is only 18%.

However, we cannot ignore the fact about the volatility in this pair. This pair is pretty volatile and must be traded cautiously. It is recommended for traders to trade when the volatility of the market is around the average values. Furthermore, the costs can be reduced even further by placing orders as a limit or stop instead of the market. In doing so, the slippage will become zero and will reduce the total cost of the trade.

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Forex Assets

Asset Analysis – Exploring The GBP/AED Forex Currency Pair

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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Trading The XRP/USD Pair & Analysing The Costs Involved

Introduction

XRP/USD is the abbreviation for Ripple against the US Dollar. This pair is used for trading the Ripple cryptocurrency. Also, traders can trade Ripple against other fiat currencies.

Understanding XRP/USD

The value of XRP/USD represents the value of the US Dollar equivalent to one Ripple. It is quoted as 1 XRP per X USD. For example, if the value of XRP/USD is 0.1912, then it can be said that each Ripple is worth 0.1912 US Dollars.

XRP/USD specifications

Spread

Spread is the difference between the bid and the ask price quoted by the brokers. It varies based on the execution model used. Below are the ECN & STP spreads for the XRP/USD pair.

Spread on ECN: 50 pips | Spread on STP: 53 pips

Fee

The fee is the commission that is levied by the brokers on each trade. This fee is only applicable to ECN brokers, not STP brokers.

Slippage

When orders are executed on the ‘market,’ the price requested by the trader is different from the price given by the broker. This can happen either because of high market volatility or broker’s execution speed

Trading Range in XRP/USD

The minimum, average, and maximum pip movement in XRP/USD are given below. One can use these values to determine the profit/loss they could make in a given timeframe.

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.

XRP/USD Cost as a Percent of the Trading Range

By applying the volatility values to the total cost of a trade, the variation in the costs for varying volatilities can be determined. Below are two tables representing the same.

ECN Model Account

Spread = 50 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 50 + 5 = 58

STP Model Account

Spread = 53 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 53 + 0 = 56

Trading the XRP/USD

While trading a pair, there are two factors that must be taken into consideration, namely, volatility and cost.

Volatility

The minimum in the 4H timeframe is 18 pips, while 142 pips are the maximum. And the average stands at 63. So, if a trader wishes to trade the 4H timeframe, then they should make sure that the current volatility is at or above the average volatility. This is because one can make money only when there is movement in the market.

Cost

Cost is not constant but varies as the volatility changes. The cost percentages in the minimum column are the highest compared to the average and maximum columns. This means that the costs are very high for highly volatile markets. Hence, it must be avoided.

The benefit with limit orders

Traders who trade with limit orders have an added benefit than those who trade with market orders. With limit orders, the total cost of the trade does not include the slippage. This hence brings down the cost of the trade to a decent extent.

This concludes the analysis of BCH/USD. We hope you found it interesting and useful. Stay tuned for more such asset analysis. Cheers!

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Forex Assets

Analyzing The BCH/USD Crypto-Fiat Pair

Introduction

BCH/USD is a cryptocurrency abbreviated for the Bitcoin Cash against the US Dollar. This is the highest traded cryptocurrency in terms of volume. Also, it is a 24/7 market. Note that, Bitcoin Cash is not the same Bitcoin; both are two different cryptocurrencies.

Understanding BCH/USD

The price of BCH/USD represents the value of the US Dollar that makes up one Bitcoin Cash. It is quoted as 1 BCH per X USD. For example, if the value of BCH/USD is 234.06, these many US Dollars are required to purchase one Bitcoin Cash.

BCH/USD Specifications 

Spread

Spread is the difference between the bid and the ask price. Spread is different with different brokers and the type of execution model they use. Below are the ECN & STP values for the BCH/USD pair.

Spread on ECN: 400 pips (4.00 USD) | Spread on STP: 450 pips (4.50 USD)

Fee

A Fee is a commission paid on each position a trader takes and closes. This fee is charged only by ECN brokers. The slippage for each lot traded is a pip. The seems to be less because one lot accounts for only 1 BCH.

Slippage

Slippage is the difference between the price demanded by the trader and the price given by the broker. There are two reasons for slippage to occur:

  • High market volatility
  • Broker’s execution speed

Trading Range in BCH/USD

A Trading range is the representation of the volatility in BCH/USD for different timeframes. The numbers help in determining the approximate risk and reward 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.

BCH/USD Cost as a Percent of the Trading Range

A Fee is a variable that varies as the volatility of the market changes. Below are tables depicting the variation in the costs with the change in the volatility.

ECN Model Account

Spread = 400 | Slippage = 10 |Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 10 + 400 + 1 = 411

STP Model Account

Spread = 450 | Slippage = 10 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 10 + 450 + 0 = 460

Trading the BCH/USD

As mentioned, BCH/USD is currently the most traded cryptocurrency in the market. Therefore, one can expect enough volatility and liquidity. The volatility in BCH/USD is very high. For example, the minimum volatility on the 1H timeframe is 20, while the maximum is 118 on the same timeframe, which is five times the minimum. Hence, this makes this pair highly volatile and risky as well.

So, it is ideal for traders to trade when the volatility is between the average values. The volatility during such times is neither too high nor too low. Also, the costs aren’t too high. If traders wish to reduce costs even further, they could trade via limit or stop orders instead of market orders, as this would completely cut the slippage on the trade. The cost variations when the trades are executed either by limit or stop is given below.

ECN Model Account (Using Limit Orders)

Spread = 400 | Slippage = 0 |Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 0 + 400 + 1 = 401

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Forex Assets

‘LTC/USD’ – Understanding The Crypto/Fiat Pair & Trading Costs Involved

Introduction

Cryptocurrencies are traded in pairs by pairing them with a fiat currency. Always, the cryptocurrency is written on the left and the fiat currency on the right. LTC/USD is a cryptocurrency, which is an abbreviation for the Litecoin versus the US Dollar. Like the Bitcoin and Ethereum, Litecoin is extensively traded in the exchange market.

Understanding LTC/USD

The market price of LTCUSD depicts the value of the US Dollar, which is equivalent to 1 Litecoin. It is quoted as 1 LTC per X USD. For example, if the value of LTCUSD is 41.69, then one Litecoin is worth 41.69 US Dollars.

LTC/USD specifications

Spread

Spread is the difference between the bid and the ask price in the market, where bid price is given considered when shorting a pair and ask price when going long on a pair. The varies from broker to broker. It also differs based on the type of execution model used. Below are the spreads for the LTC/USD pair for both ECN & STP accounts.

  • Spread on ECN: 50 pips (0.5 USD)
  • Spread on STP: 60 pips (0.6 USD)

Fee

ECN brokers charge some commission on every position a trader opens and closes. The fee for ECN accounts is about $0.18 per standard lot, which corresponds to 18 pips.

Slippage

Slippage is the difference between the price asked by the user and the price given by the broker. There is this difference due to two reasons – High market volatility & broker’s execution speed.

Trading Range in LTC/USD

Below is the trading range table for the LTCUSD, which represents the minimum, average, and maximum volatilities of a pair for different timeframes using the ATR indicator. These values can prove to be helpful for assessing one’s profit/loss 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.

LTC/USD Cost as a Percent of the Trading Range

The cost as a percent of the trading range represents the variation of cost on a trade based on the change in the volatility of the market. And these variations are indicated as a percentage. Using the magnitude of the percentages, we shall determine the ideal times of the day to trade this coin.

ECN Model Account

Spread = 50 | Slippage = 5 |Trading fee = 18

Total cost = Slippage + Spread + Trading Fee = 18 + 50 + 5 = 73

STP Model Account

Spread = 60 | Slippage = 5 | Trading fee = 0Total cost = Slippage + Spread + Trading Fee = 5 + 60 + 0 = 65

Trading the LTC/USD

LTCUSD is a crypto-fiat pair that has got enough volatility and liquidity to trade in the market. LTC is the fourth highest traded coin in terms of volume. However, it is not apt to trade anytime during the day. There are ways through which one reduces their costs for the same trade.

In the above table, if the percentages are high, then the costs are very high and vice versa. So, the cost is more for low volatile markets and less for high volatile markets. If you are a scalper or short-term trader, you may trade when the volatility is high as the profit margin is small, and you can avoid high costs.

Positional traders – these traders usually aim for large movements, and high costs become a little insignificant for their big pip movements. So, such traders may trade when the volatility is around the average values. Finally, it is not advisable to trade during low volatilities because the costs are high, and there is barely any movement in the market.

Slippage is a variable in total costs that can be eliminated by placing orders as ‘limit’ or ‘stop.’ We hope you found this analysis on LTCUSD useful. Stay tuned for more informative content. Cheers.

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Exploring The ETH/USD Pair & The Relative Costs Involved

Introduction

Trading cryptocurrencies is similar to trading in the Forex market, but the only difference being, both base and quote currencies are not fiat currencies. In crypto pairs, one of them is a virtual currency, and the other is a fiat currency. ETH/USD is a cryptocurrency pair, which is an abbreviation for Ethereum against the US Dollar. Participants can trade them via Forex brokers or through cryptocurrency exchanges.

Understanding ETH/USD

The value of ETHUSD represents the value of the US Dollar that is required to purchase one. It is quoted as 1 ETH per X USD. For instance, if the market price of ETHUSD is 170.46, then around 170 US Dollars are needed to buy one ETH.

ETH/USD Specifications 

Spread

The difference between the bid price and the ask price marked by the brokers is called the spread. Spread is the main source of revenue for brokers. Spread on major and minor currency pairs is typically very low. But, in cryptocurrencies, the spread is usually high. Below are the spread values of ECN & STP accounts for the ETH/USD pair.

  • Spread on ECN: 200 pips (2 USD)
  • Spread on STP: 250 pips (2.5 USD)

Fee

A Fee is applicable only on ECN accounts and the pro accounts of brokers. Typically, it is between 40-50 pips.

Slippage

Slippage is the difference between the price at which a trader opened a position and the price given by the broker. Due to the high volatility of the market and slow execution by the brokers, slippage occurs.

Trading Range in ETH/USD

Below is the representation of the volatility from minimum to maximum for ETHUSD in different timeframes. These numbers are very helpful in assessing one’s risk 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.

ETH/USD Cost as a Percent of the Trading Range

With the application of the volatility values with the total cost on the trade, the variation in the cost of a trade can be assessed. To do so, the ratio between the total cost and volatility is taken and expressed in terms of a percentage.

The magnitude of the costs represents how high the costs are. If the percentages are large, it indicates high costs and vice versa.

ECN Model Account

Spread = 200 | Slippage = 15 |Trading fee = 45

Total cost = Slippage + Spread + Trading Fee = 15 + 200 + 45 = 260

STP Model Account

Spread = 250 | Slippage = 15 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 15 + 250 + 0 = 265

Trading the ETH/USD

Cryptocurrencies can be traded just like any other asset. In ETHUSD, the volatility is good enough for both short-term and long-term traders. Though the volatility values appear to be high, they don’t have a large reflection on your profit/loss. This is because, unlike forex currencies where one lot was equivalent to 100,000 units of the base currency, one lot in ETHUSD represents only 10 units of ETH.

From the above volatility table, it is seen that the costs are more when the volatility of the market is low and is less when the volatility is high. So, trading this pair majorly depends on the type of trader you are. For example, scalpers might trade when the volatility is high to get the greatest number of pips in a short amount of time. If they do so, they can get the benefit of lower costs.

In general, costs on a trade can be reduced by placing orders as ‘limit’ or ‘stop.’ In such orders, the slippage becomes nil. Hence, the total cost would be brought down to a good extent. The cost variations for limit orders or stop orders are given below for your reference and comparison.

ECN Model Account (Using Limit Orders)

Spread = 200 | Slippage = 0 |Trading fee = 45

Total cost = Slippage + Spread + Trading Fee = 0 + 200 + 45 = 245

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

Introduction

Apart from currencies pairs, exchanges allow trading of cryptocurrencies as well. Cryptocurrencies can be bought and sold in the exchange market through Forex brokers. Trading cryptocurrencies can be closely related to Forex trading but not stock trading. This is because cryptos are traded as pairs and not individually. In this series, we will be analyzing the trading costs involved while trading cryptocurrencies that are paired with fiat currencies (Ex: USD).

BTC/USD is a cryptocurrency pair where BTC stands for Bitcoin, and USD stands for US Dollar. This pair is traded through Forex brokers as CFDs, or through cryptocurrency exchanges where cryptos are bought and sold exclusively.

Understanding BTC/USD

The price of BTC/USD in the exchange market represents the value of the US Dollar equivalent to one 1 Bitcoin. It is quoted as 1 BTC per X USD. For example, if the current market price of BTCUSD is 7356.50, then it can be said that one Bitcoin is equal to the US $7356.50.

BTC/USD specifications

Spread

Spread is the difference between the bid and the ask price in the exchange market. It is determined by the brokers and exchanges, and it hence varies from time to time. Typically, the spreads for trading cryptocurrencies are very high. In recent years, the spread of coins having two decimal places is between 1500-6000 pips. The approx. spread on ECN and STP accounts are given below.

  • Spread on ECN: 3000 pips (30 USD)
  • Spread on STP: 3050 pips (30.5 USD)

Fees

The fee is simply the commission paid for the position a trader takes. It is charged only for ECN and Pro accounts and not for STP accounts. For our analysis, we shall keep the fee at 45 pips.

Slippage

Slippage is the difference between the price at which a client executed trade and the price which was actually given by the broker. This difference occurs either because of high market volatility or speed of trade execution.

Trading Range in BTC/USD

The trading range is the representation of the pip movement in the pair for different timeframes. The values are calculated using the average true range indicator. And the procedure to assess it is given below as well.

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.

BTC/USD Cost as a Percent of the Trading Range

Cost is a factor that varies with the change in the volatility of the market. By finding the ratio between the total cost and volatility, the variation in the costs is measured.

ECN Model Account

Spread = 3000 | Slippage = 25 |Trading fee = 45

Total cost = Slippage + Spread + Trading Fee = 25 + 3000 + 45 = 3070

STP Model Account

Spread = 3050 | Slippage = 25 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 25 + 3050 + 0 = 3075

The Ideal way to trade the BTC/USD

It is a general impression that trading cryptos are very risky because of its high volatility. But it is not completely true. To clear the misconception, consider the following example.

The pip value of BTC/USD per lot is 0.01 USD. That is, for every pip up or down, you will gain or lose 0.01 USD. The average pip movement in the 1H timeframe is 9100 pips. So, if you trade one lot of BTC/USD, you will win or lose about $0.01 x 9100 = $91 in a time frame of one hour. Hence, though the pip movement seems to be high, the profit/loss remains within decent boundaries.

Considering the cost variation in the above tables, it can be inferred that the costs are more for low volatile markets and less for a highly volatile market. But, the cost for average volatility acts as a median. Hence, trading when the volatility is around the average values is recommended. Furthermore, costs can be lowered by trading via limit orders instead of market orders. In doing so, the slippage on the trade will be nullified and will not be included in the total cost. In the above example, the total cost would reduce by 25 pips.

That’s about the trading costs involved while trading the BTC/USD pair. We will be discussing more Crypto/Fiat pairs in the upcoming articles. In case of any queries, let us know in the comments below. Cheers!

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Understanding The GBP/HUF Exotic Currency Pair

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

Analyzing The GBP/TWD Forex Currency Pair

Introduction to GBP/TWD

GBP stands for British pound sterling, and it is typically known as Pound. It is the official currency of the United Kingdom and some other countries like Jersey, South Georgia, and Guernsey. The pound is also the 4th most traded currency in the foreign exchange after USD, EUR & YEN. Whereas TWD is the abbreviation of The New Taiwan dollar. The central bank of Taiwan issues this currency.

GBP/TWD

Currency pairs are the national currencies from two countries coupled for being exchanged in reference to each other. In the Forex market, one currency is always quoted against the other. GBP/TWD is the abbreviation for the Pound sterling against the New Taiwan dollar. In this case, the first currency(GBP) is the base currency, and the second(TWD) is the quote currency.

Understanding GBP/TWD

In Forex, 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/TWD determines the strength of TWD against the GBP. This can be easily understood as 1GBP is equal to how much of TWD. So if the exchange rate for the pair GBP/TWD is 37.093, it means we need 37.093 TWD 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 for the pair GBP/TWD.

ECN: 49 pips | STP: 52 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, sometimes when we place a large number of orders at the same time.

Ranges in GBP/TWD

The Range is a measure of volatility. It tells how much the currency pair has moved in a determined period. Whether a trader makes a profit or loss in a given time period depends on the movement of a currency pair and can be determined 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/TWD 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 = 49 | Slippage = 3 |Trading fee = 5

Total cost = Slippage + Spread + Trading Fee = 3 + 49 + 5 = 57

STP Model Account

Spread = 52| Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 52 + 0 = 55

Trading the GBP/TWD Forex Pair

The GBP/TWD is an exotic-cross currency pair and is a ranging market. A market is said to be ranging when the price hits the support and resistance at least three times. As seen in the Range table, the average pip movement on the 1-hour time frame is only 47. 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.

Here in GBP/TWD, TWD is considered to be an emerging currency. 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.

For example, in the 1M time frame, the maximum pip range value is 3009 and in minimum pip range, the value is 687. When we compare the fees for both the pip movements, we find that for 687 pip movement fees is 8.30%, and for 3009pip movement, fess is only 1.89%.

So, we can infer that the cost of trade is higher in the low volatile markets and high in the 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 our priority is not towards reducing costs, we 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

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

Everything About The EUR/RUB Forex Asset

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

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.

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Forex Assets

Understanding The EUR/EGP Exotic Currency Pair

Introduction

The Euro Area’s euro against the Egyptian Pound is abbreviated as EUREGP. This is an exotic-cross currency pair in the forex market. In this pair, the EUR is the base currency, and the EGP is the quote currency.

Understanding EUR/EGP

The market price of the EUREGP depicts the value of EGP that is equivalent to one euro. It is simply quoted as 1 EUR per X EGP. So, for example, if the market price of this pair is 17.8341, then exactly 17.8341 Egyptian Pounds is required to purchase one Euro.

Spread

The difference between the bid price and the ask price is referred to as the spread. These two values are set by the brokers. Hence, it is different for different brokers. The spread also varies based on how the orders are executed.

ECN: 100 pips | STP: 111 pips

Fees

The fee is simply the commission paid on the trade. There is no fee on STP execution model but a few pips on the ECN execution model. However, the fee absence on STP accounts is usually compensated by higher spreads.

Slippage

Slippage is the difference between the price which was wanted by the trader and the price the broker actually gave the trader. It is typically not possible for brokers to give the exact price intended by the traders due to reasons:

  • Broker’s trade execution speed
  • Market volatility

Trading Range in EUR/EGP

Trading range is an illustration of the pip movement in a currency pair for different timeframes ranging from 1H to 1M. These volatility values help in assessing the risk involved in a trade. Basically, it acts as an effective risk management tool. Another application to it is discussed in the subsequent section.

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/EGP Cost as a Percent of the Trading Range

This is a very helpful application of the trading range. In the cost as a percent of the trading range, we combine the volatility values with the total cost on the trade and observe how the cost varies for changing volatilities.

ECN Model Account

Spread = 100 | Slippage = 10 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 10 + 100 + 3 = 113

STP Model Account

Spread = 111 | Slippage = 10 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 111 + 0 = 114

Trading the EUR/EGP

The EUR/EGP is an exotic-cross currency pair. This pair is highly volatile, but the trading volume is pretty low. However, this pair can still be traded in certain situations.

Firstly, we can see that the spreads on this pair are high. This is because the volatility in this pair is very high. For example, the average pip movement in the 1H timeframe is over 400 pips. So, we can’t really say that the spread of this pair is high.

Consider the table representing the variation in the costs. We can see that the percentages are highest in the min column. And the values are considerably small in the average and max column. If we were to interpret this, the cost of the trade reduces as the volatility of the market increases. So, based on the type of trader you are, you can choose to enter the market. For example, if you’re concerned about the high costs, then you may trade when the volatility of the market is at its peak. If you’re a conservative trader who needs petty low volatility, then you may use it during low volatilities, but you’ll have to bear high costs for it.

Furthermore, there is a way through which you can bring down your existing cost on the trade. This is simply by executing trades using limit or stop orders instead of the market. In doing so, the slippage will be nullified. So, in our example, the total cost would reduce by ten pips.

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Forex Assets

EUR/MXN – Analyzing The Costs Involved While Trading This Exotic Pair

Introduction

EUR/MXN is the abbreviation for the Euro Area’s euro against the Mexican Peso. It is classified as an exotic-cross currency pair. Here, the EUR is the base currency, and the MXN is the quote currency.

Understanding EUR/MXN

The market value of EURMXN determines the value of MXN that is required to buy one euro. It is quoted as 1 EUR per X MXN. So, if the market price of this pair is 24.4733, then these many units of Mexican pesos are required to buy one EUR.

Spread

The spread is the difference between the bid price and the ask price. These two prices are set by the brokers. The pip difference is through which brokers generate revenue.

ECN: 46 pips | STP: 49 pips

Fees

A fee is simply the commission you pay to the broker on each position you open. There is no fee on STP account models, but a few pips on ECN accounts.

Slippage

Slippage is the difference between the price at which the trader executed the trade and the price he actually got from the broker. This changes based on the volatility of the market and the broker’s execution speed.

Trading Range in EUR/MXN

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.

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/MXN 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 = 46 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 46 + 3 = 52

STP Model Account

Spread = 49 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 49 + 0 = 52

Trading the EUR/MXN

The EURMXN is a very volatile pair. For instance, the average pip movement on the 1H timeframe is only 335 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 your risk, it is recommended to trade when the volatility is around the minimum values. The volatility here is low, and the costs are a little high compared to the average and the maximum values. But, if you’re priority is towards reducing costs, you may trade when the volatility of the market is around the maximum values.

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. Hence, this will bring down the cost significantly.

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Forex Assets

Costs Involved While Trading The EUR/CZK Forex Pair

Introduction

EUR/CZK is the abbreviation for the Euro Area’s euro against the Czech Koruna. This pair is an exotic-cross currency pair. Here, the EUR is the base currency, and the CZK is the quote currency.

Understanding EUR/CZK

The price of this pair in the exchange market determines the value of CZK equivalent to one euro. It is quoted as 1 EUR per X CZK. So, if the value of this pair is 26.0896, these many Korunas are required to purchase one EUR.

 

Spread

Spread is the difference between the bid and the ask price offered by the broker. This value is different on the ECN account model and STP account model. An approximate value for the two is given below.

ECN: 45 pips | STP: 47 pips

Fees

A fee is another term for the commission of the trade. There is no fee on STP accounts, but a few pips on ECN accounts.

Slippage

Slippage is the difference between the price intended by the trader and the price the trader actually received from the broker.

Trading Range in EUR/CZK

The trading range is the tabular representation of the pip movement of a currency pair in different timeframes. These values are useful for determining the profit that can be generated from a trade before-hand. To find the value, you must 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.

EUR/CZK Cost as a Percent of the Trading Range

This is the representation of the cost variation of trades for different timeframes and volatilities. The values are obtained by finding the ratio between the total cost and the volatility value and are expressed as a percentage.

ECN Model Account

Spread = 45 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 45 + 3 = 51

STP Model Account

Spread = 47 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 47 + 0 = 50

Trading the EUR/CZK

The larger the percentage values, the higher is the cost of the trade. From the above tables, we can see that the values are large in the min column and comparatively smaller in the max column. This means that the costs are high when the volatility of the market is low.

It is neither advisable to trade when the volatility of the market is high, nor when the costs are high. To have a balance between both these factors, it is ideal to trade when the volatility of the pair is in the range of the average values.

Furthermore, to reduce your costs even further, you 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. And this will bring down the cost of the trades by a decent number. An example of the same is given below.

Spread = 45 | Slippage = 0 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 0 + 45 + 3 = 48

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Forex Assets

Analyzing The EUR/PLN Exotic Currency Pair

Introduction

EUR/PLN is the abbreviation for the Euro Area’s euro against the Polish Zloty. This European currency is classified as an exotic-cross currency pair. In this pair, the EUR is the base currency, and the PLN is the quote currency.

Understanding EUR/PLN

The value of this pair simply represents the value of PLN equivalent to one Euro. It is quoted as 1 EUR per X PLN. An example of the same is shown below.

Spread

The spread is a popular terminology used in the forex industry, which is defined as the difference between bid and ask prices in the market. This is not the same on all brokers but varies based on the execution model they use.

ECN: 30 pips | STP: 34 pips

Fees

A Fee is similar to the commission that is paid to the brokers. Fee on ECN accounts is between 5-10 pips, while it is nil for STP accounts.

Slippage

Slippage is the difference between the price wanted by the client and the price they actually received from the broker. There is this difference due to two reasons:

  • Broker’s execution speed
  • Market volatility

Trading Range in EUR/PLN

A trading range is a table that represents the minimum, average, and maximum volatility of the market for various timeframes. With these pip movements from the past, we can determine the profit/loss that can be made from 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.

EUR/PLN Cost as a Percent of the Trading Range

In calculating the total costs, spread and slippage are variables. These values change as the volatility of the market changes. And below, we have represented the variation of the costs by applying the values from the trading range table.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 30 + 3 = 36

STP Model Account

Spread = 34 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 34 + 0 = 37

Trading the EUR/PLN

Trading the EURPLN is not a hurdle. Though this pair is a major/minor currency pair, its characteristics are similar to that of majors/minors.

Firstly, the spread is around 30 pips, which are lower compared to other exotic-cross currencies involving EUR as the base currency. Secondly, the volatility of this pair is pretty decent. It is neither too high nor too low.

Coming to the above two tables, we can see that the percentage values are large in the min column and gets smaller as we move towards the max column. Since the values in the min column are significant, it is not advisable to trade this pair during low volatility. To have enough volatility with inexpensive costs, one may trade when the volatility is around the average values.

Placing orders through ‘limit’ and ‘stop’ would further decrease the costs. In doing so, the slippage on the trade will be nullified, and this will, in turn, bring down the total costs.

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Everything About EUR/TRY Forex Currency Pair

Introduction

EUR/TRY is the abbreviation for the Euro area’s euro against the Turkish Lira. This pair is classified as an exotic-cross currency pair. In this pair, EUR is the base currency, and TRY the quote currency.

Understanding EUR/TRY

The price of this pair determines the value of TRY, which is equivalent to one euro. It is quoted as 1 EUR per X TRY. For example, if the value of this pair is 6.5552, then about 6.5 Turkish Liras are required to purchase one euro.

EUR/TRY Specification

Spread

Spread is simply the difference between the bid price and the ask price in the market. This value is controlled by the brokers. This value varies on the type of execution model used for executing the trades.

Spread on ECN: 40 pips | Spread on STP: 44 pips

Fees

The fee in Forex is similar to the one that is pair to stockbrokers. Note that, there is no fee on STP accounts, but a few pips on ECN accounts.

Slippage

The slippage on a trade is the difference between the price that is demanded by the trader and the price that is actually executed by the broker. Market volatility and the broker’s execution speed are the reasons for slippage to occur.

Trading Range in EUR/TRY

A trading range is the representation of the minimum, average, and the 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.

EUR/TRY 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 = 40 | Slippage = 3 | Trading fee = 3

Total cost = Spread + Slippage + Trading Fee = 40 + 3 + 3 = 46

STP Model Account

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

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

The Ideal way to trade the EUR/TRY

The EURTRY is a pair with enough volatility and liquidity. Hence, this makes it simpler to trade this exotic-cross currency.

From the above table, we can see that the percentage values are all within 200%. This means that the costs are low irrespective of the timeframe and volatility you trade.

Digging it a little deeper, the costs are higher when the volatility of the market is low and lower for higher volatilities. However, we cannot ignore the fact that this pair is highly volatile. For example, the maximum volatility on the 1H timeframe is as high as 456. So, traders must be cautious before trading this pair.

When it comes to the best time of the day to trade this pair, it is ideal for entering this pair during those times of the day when the volatility is in between the average values because this will ensure decent volatility as well as low costs.

Furthermore, traders can easily reduce their costs by placing orders as ‘limit’ and ‘stop’ instead of ‘market.’ In doing so, the slippage on the trade will not be considered in the calculation of the total costs. So, in our example, the total cost will reduce by three pips.

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Everything You Should Know About The EUR/SEK Forex Pair

Introduction

EUR/SEK is the abbreviation for the Euro Area’s euro against the Swedish Krona. This exotic-cross currency pair has enough volatility but lacks liquidity. This is the reason this has pretty high spreads. In this pair, EUR is the base currency, and SEK is the quote currency.

Understanding EUR/SEK

The market price of EURSEK as a whole determines the value of SEK that is required to buy one euro. It is quoted as 1 EUR per X SEK. For example, if the value of this pair is 10.5839, then this amount of SEK is required to purchase one EUR.

EUR/SEK Specification

Spread

The difference between the bid price and the ask price is called the spread. This value is different from one ECN and STP accounts. The approximate values of the same are mentioned below.

Spread on ECN: 50 pips | Spread on STP: 55 pips

Fees

The fee is simply the commission paid for the trade. This, too, depends on the type of execution model used by the broker. The fee on ECN accounts is a few pips, while it is nil on STP accounts.

Slippage

The slippage is the difference between the trader’s intended price and the broker’s executed price. There is this difference because orders are executed by the ‘market.’ The two main reasons for slippage to occur include, broker’s execution speed & Market volatility.

Trading Range in EUR/SEK

With the values in the trading range, which depict the pip movement in different timeframes, we can determine the gain or loss that is possible on trade.

These values are obtained by combining the moving average with the average true range indicator. A complete procedure to get it into your charts is given below.

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/SEK Cost as a Percent of the Trading Range

Firstly, the total cost is calculated by finding the sum of the spread, slippage, and trading fee. And this cost varies as the volatility of the market changes. Below is a table that represents the cost variation for EURSEK for both ECN and STP accounts.

ECN Model Account 

Spread = 50 | Slippage = 3 | Trading fee = 3

Total cost = Spread + Slippage + Trading Fee = 50 + 3 + 3 = 56

STP Model Account

Spread = 55 | Slippage = 3 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee = 55 + 3 + 0 = 58

Note: The costs may seem high because of the Spreads. As we know, these Spreads keep changing from time to time. At times we have seen the spreads for this pair being as low as 10. But we have considered the maximum spread to give you the maximum cost percentages.

The Ideal way to trade the EUR/SEK

From the trading range table, we can clearly see that the volatility in this pair is pretty high. However, this does not mean that it cannot be traded.

Coming to the next two tables, the percentage values are within the 600% mark. Note that the higher the value of the percentages, the higher is the cost. The opposite holds true, as well. Since the percentage values are high in the min column, we can conclude that the costs are high when the volatility of the market is low.

Now, to have a balance between the costs and the volatility, one must trade during those times when the volatility of the market is around the average values in the trading range table.

Moreover, there is a way through which we can nullify the slippage on the trade. This can simply be done by placing orders using ‘limit’ instead of ‘market.’ In doing so, the total cost will reduce by a decent amount.

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Trading Costs Involved While Trading The EUR/SGD Exotic pair

Introduction

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

Understanding EUR/SGD

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

EUR/SGD Specification

Spread

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

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

Fees

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

Slippage

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

Trading Range in EUR/SGD

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

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

Procedure to assess Pip Ranges

  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/SGD Cost as a Percent of the Trading Range

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

ECN Model Account 

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

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

Total cost = 16

STP Model Account

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

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

Total cost = 14

The Ideal way to trade the EUR/SGD

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

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

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

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Analyzing The USD/MAD Forex Currency Pair

Introduction

USD/MAD is the abbreviation for the US dollar against the Moroccan Dirham. This pair is classified as an emerging currency pair in the forex market. In this pair, USD is the base currency, and MAD is the quote currency. Typically. It is seen that this pair has pretty low volatility and liquidity. However, it can still be traded under certain conditions.

Understanding USD/MAD

The market price of this currency pair determines the value of MAD that is equivalent to one USD. For instance, if the current market price of USD/MAD is 9.5867, then these many Moroccan Dirhams are required to purchase one USD.

Spread

The difference between the bid price and the ask price is referred to as the spread. This is the primary way through which brokers generate revenue. Spread is a variable and is different with different brokers. It also differs based on the execution model used by the broker.

ECN: 35 pips | STP: 40 pips

Fees

The commission paid on each trade is the fee on that trade. Note that, the concept of the fee is only ECN accounts and not STP accounts. The fee on ECN accounts is typically between 5-10 pips.

Slippage

Slippage is the difference between the price intended by the client and the price that is actually executed by the broker. There is this difference due to two reasons:

  • Market’s volatility
  • Broker’s execution speed

Trading Range in USD/MAD

The trading range is the tabular representation of the volatility of the market in different timeframes. These values help in assessing the minimum, average, and maximum profit/loss in six different 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.

USD/MAD Cost as a Percent of the Trading Range

The total cost of the trade is calculated by adding up the slippage, spread, and the trading fee. It is not constant but varies based on the volatility of the market. Below are tables that represent how costs vary for different timeframes and volatilities.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 35 + 3 = 41

STP Model Account

Spread = 40 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 40 + 0 = 43

The Ideal way to trade the USD/MAD

Starting off from the trading range table, we can see that the volatility of this pair is quite high. The spread, too, is higher than other emerging pairs. So, it is not really ideal to trade at any time in 24 hours.

When we have a look at the cost percentage tables, we can see that the percentages are high in the minimum column, and low in the max column. This implies that the costs are high during low volatilities, and costs are low during high volatilities. So, the best time to trade this pair is when the volatility is around the average values because this assures decent volatility as well as affordable costs.

Furthermore, the costs can be reduced by placing orders as ‘limit’ instead of ‘market’. In doing so, the slippage on the total costs will be made zero. So, spread and trading fee will be the only factors involved in calculating the total cost.

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Understanding The USD/TWD Forex Currency Pair

Introduction

USDTWD is the abbreviation for the US dollar against the New Taiwan Dollar. Due to the involvement of Taiwan in this pair, this pair is classified as an Asian emerging currency pair. Here, the US Dollar is the base currency, and the New Taiwan Dollar is the quote currency.

Understanding USD/TWD

The TWD required to purchase one USD is determined by the price on the exchange rate. It is simply quoted as 1 USD per X TWD. For example, if the price of this pair was 25.856, a rounded figure of 26 TW Dollars are needed to buy one US Dollar.

Spread

The spread is a type of fee that is paid to the broker on each trade. The amount to be paid depends on the lot size traded and also the volatility of the market. It is simply the difference between the bid price and the ask price on the exchange board. The bid and ask price is typically different from different brokers. It also varies based on the execution model implemented by the broker.

ECN: 27 pips | STP: 30 pips

Fees

The commission that a broker charges on each of your trade is the fee. This, too, depends on the type of execution model. Note that there is no fee on STP accounts. However, this is covered by higher spreads.

Slippage

In market orders, one does not get the exact price at which they triggered their buy/sell button. It varies due to the market volatility and the broker’s execution speed. This could be in favor of or against the client.

Trading Range in USD/TWD

The trading range is a range of pip movement values in different timeframes. In simple terms, it tells the number of pips the currency pair has moved in a given timeframe. For example, if the minimum volatility value on the 1H timeframe is five pips, then it means that this pair moves at least five pips in about an hour or so. These values can be helpful in figuring the approximate P/L on a trade, even before placing the 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.

USD/TWD Cost as a Percent of the Trading Range

From the above table, one may even determine the total cost variation in trade in different timeframes for different volatilities. With these values, we can, in turn, determine the ideal way to trade this currency pair.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 27 + 3 = 33

STP Model Account

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

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

The Ideal way to trade the USD/TWD

The magnitude of the percentages in the table represents how high or low is the cost of the trade. It is proportional to the cost of the trade. In the below table, we can clearly see that the costs are high in the min column, depicting high costs for lower volatilities. Similarly, low costs for high volatilities.

Also, the costs are pretty high on lower timeframes compared to the higher timeframes. So, this definitely is not the best pair to trade for scalpers. With an investment point of view, it could prove to be the best pair irrespective of the timeframe you’re trading. Talking about a positional trader, it is ideal to trade during those times when the volatility of the market is around the average values.

Another simple way to bring your costs down is by placing limit or stop orders instead of market orders. This considerably brings down the cost of the trade as the slippage in such orders is nil.

Below is an example of the cost percentages when the slippage is made zero.

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

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

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Trading Costs Involved While Trading The USD/PHP Forex Pair

Introduction

USD/PHP is the abbreviation for the US dollar versus the Philippine Peso. Since Philippine is involved in the pair, this classified under the Asian emerging pairs. In this pair, the USD is the base currency and the PHP is the quote currency.

Understanding USD/PHP

The current market price determines the price of PHP that is equivalent to one US dollar. It is simply quoted as 1 USD per X PHP. For example, if the price of this pair was 50.96, then around 51 pesos would be required to buy one US dollar.

Spread

The difference between the bid price and the ask price is referred to as the spread. This value a variable that varies from broker to broker as well as the type of execution model used by the brokers.

ECN: 3 pips | STP: 4 pips

Fees

The fee is a synonym for commission. It is levied on the ECN accounts only and not STP accounts.

Slippage

Slippage is some sort of a fee that is paid only on market orders. Slippage is the pip difference between the trader’s requested price and the price that was given by the broker. There is variation primarily due to two reasons – Market’s volatility & Broker’s execution speed

Trading Range in USD/PHP

Wanting to know how much could be your minimum average and maximum profit/loss of a trade in a given timeframe? Below is a table that will help you with it. With the pip movement values in the table, one can determine their risk on the trade. All you have to do is, multiply the volatility value with the pip value ($19.24). This will yield the value for one standard lot size.

 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.

USD/PHP Cost as a Percent of the Trading Range

Apart from the profit/loss in a trade, we can even determine the cost variation in altering volatilities. To do so, we have taken the ratio between the volatility value and the total cost and represented it as a percentage.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 3+ 3 = 9

STP Model Account

Spread = 4 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 4 + 0 = 7

The Ideal way to trade the USD/PHP

Firstly, from the trading range table, we can infer that the volatility of this pair is feeble. But, note that, the small pip movement values do not mean you’ll have to trade large quantities to make a good profit. Since the pip value (per standard lot) is $19.24, even a 0.1 pip will generate $1.924.

Coming to the cost table, the percentages here are too high, especially in the min column. So it is recommended to not trade during low volatilities as It will have high costs. So, to reduce costs, it is ideal to trade when the volatility of the market is on the higher side. As far as the risk involved in highly volatile markets is concerned, you may cut down your lot sizes.

To simplify it even further, you can bring down your costs by executing your trades as limit/stop orders instead of market orders. This eliminates the slippage involved in the calculation of total costs on the trade.

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Analyzing The USD/KRW Forex Currency Pair

Introduction

USDKRW is the abbreviation for the US Dollar against the South Korean Won. This pair comes under the branch of emerging currency pairs. Here, the US Dollar, being on the left, is the base currency, and the KRW is the quote currency.

Understanding USD/KRW

The market price of this determines the value of KRW equivalent to the US $1. It is quoted as 1 USD per X KRW. So, if the market price of USDINR is 1199.70, these many units of the quote currency are required to purchase one unit of the base currency.

Spread

The algebraic difference between the bid price and the ask price is referred to as the spread. This is the primary source through which brokers generate their revenue. The spread varies from broker to broker and also the way through which they execute the trades.

ECN: 24 pips | STP: 25 pips

Fees

A fee is nothing but the commission that you pay to the broker on each trade. It is similar to that one that is paid to stock market brokers. Below is the fee on ECN and STP accounts.

ECN – 5-10 pips | STP – 0 pips

Slippage

Slippage is the variation in the price that was intended by the trade and price that was executed by the broker. Market volatility and the broker’s execution speed are the sole reasons for slippage to occur.

Trading Range in USD/KRW

A trading range is a table of volatility values in different timeframes. It shows the minimum, average, and maximum pip movement in USDKRW.

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.

USD/KRW Cost as a Percent of the Trading Range

This an application to the above range table. Here, we determine the variation in the costs for changing volatility and a set of timeframes. With this, we can figure out the ideal times of the day to enter and exit this currency pair.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 24 + 3 = 30

STP Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 25 + 0 = 28

The Ideal way to trade the USD/KRW

Though the Forex market is a 24-hour market, it is not really ideal to trade anytime during the day. This is due to the changes in the costs as the volatility changes.

From the table, we can observe that the cost percentage values are higher in the minimum column and comparatively lower in the maximum column. This means that the costs are high during less volatile markets, and low for highly volatile markets. So, choosing the right time to trade is dependent on the type of trader you are.

For instance, if a trader is concerned about the costs and ignorant of the volatility, then he may trade the market during high volatilities. But, if you’re a trader who’s concerned about both the factors, then you may trade during those times when the volatility of the market is around the average values. This will provide you with decent volatility with pretty low costs as well.

There is another way through which one can lower their cost much more. And this is through taking trades using limit orders instead of market orders. Considering the above-mentioned example, the total cost now would be reduced by three pips.

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Understanding The USD/INR Forex Currency Pair

Introduction

USD/INR is the abbreviation for the US Dollar against the Indian Rupee. This Asian pair is classified as an emerging currency pair. Here, the US Dollar is the base currency, and the INR is the quote currency.

Understanding USD/INR

The price in the market determines how much the Indian Rupee worth with respect to the US Dollar is. It is quoted as 1 USD per X INR. So, if the market price of USDINR is 71.46, then around ₹71 is required to purchase $1.

Spread

Spread in foreign exchange, is the difference between the bid and the ask price of the currency pair. This is the primary way through which brokers generate revenue. Spread is typically decided by the brokers itself. And it varies based on the type of execution model implemented by the brokers.

ECN: 19 pips | STP: 20 pips

Fees

Out of the two types of execution models, there is a fee, only on ECN accounts. Typically, there is no fee on STP accounts. However, this is compensated by higher spreads.

Slippage

Slippage is the difference between the price demanded by the user and the price he received by the broker. There is always this difference when orders are executed by the market. There are a couple of reasons for its occurrence.

  • Broker’s execution speed
  • Market’s volatility

Trading Range in USD/INR

The minimum, average, and maximum volatility of the currency pair in different timeframes are represented in the below trading range table. These values help us calculate the profit or loss that can be made in a given amount of time. Hence, this table is a great risk management tool.

 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.

USD/INR Cost as a Percent of the Trading Range

The costs as a percent of the trading range are the representation of the variation of the costs for different volatilities and timeframes. Understanding this cost variation helps in determining the ideal times of the day to trade this currency pair, which shall be discussed in the subsequent sections.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 19 + 3 = 25

STP Model Account

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

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

The Ideal way to trade the USD/INR

Before getting into it, let’s first comprehend the below tables. The greater the values of the percentage, the greater is the cost of the trade. Similarly, the lower the values, the lesser is the total cost of the trade. Also, costs are inversely proportional to the volatility of the market.

From the above tables, we can ascertain that the values are higher in the min column, and gradually increases in the up to the max column. This means that the costs are high when the volatility of the market is low. The costs are neither too high nor too low for average volatility. Hence, if you are a trader who requires moderate volatility and low costs, then you may trade when the volatility of the market is around the average values.

Note: The current volatility of the market can be obtained from the ATR indicator.

There is another way through which one can considerably reduce their costs. By executing trades via limit/stop orders instead of market orders, the slippage on the trade will be waived off from the total costs. This brings down the costs significantly. For example, if the slippage on the trade is five pips, then five pips will be reduced in calculating the total costs on the trade.

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Analyzing the USD/CNH Forex Currency Pair

Introduction

USDCNH is the tick symbol for the US Dollar versus the Chinese Yuan. This Asian currency pair is classified as an emerging currency pair. Here, the US Dollar is the base currency, and the CNH is the quote currency.

Understanding USD/CNH

The price of this pair as a whole determines the value of CNH equivalent to one USD. It is quoted as 1 USD per X CNH. For example, if the price of this pair currently is 6.4728, then these many Yuans are required to buy one US Dollar.

Spread

The spread is the difference between the bid price and the ask price of a currency pair. Since the bid and ask price is set by the brokers, spread varies from broker to broker. The approximate spread on ECN and STP accounts is given below.

ECN: 23 pips | STP: 24 pips

Fees

A fee is nothing but the commission that is paid to the broker on each trade. This, too, is different from broker to broker. The fee on STP accounts is nil, while there are few pips of fee for ECN accounts.

Slippage

Slippage is another type of fee which is applied for market orders. It is a pip difference between the price requested by the trader to be executed and the price that is actually given to the trade. There is this difference due to the market’s volatility and the broker’s execution speed.

Trading Range in USD/CNH

With the table given below, one can assess their risk on each trade. This table represents the range of pip values from minimum to maximum for different timeframes. Multiplying this with the value per pip yields the amount one will be risking on their 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 determine a large period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

USD/CNH Cost as a Percent of the Trading Range

The trading range values can be used to determine the variation in the costs of the trade for different volatilities as well. Below are two tables (for ECN and STP) that depict how the cost varies as the volatility and timeframes are changed.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 23 + 3 = 29

STP Model Account

Spread = 24 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 24 + 0 = 27

The Ideal way to trade the USD/CNH

This currency pair is a little, unlike the other emerging currency pairs. As in, it has pretty good liquidity and volatility. It is comparable to a cross-currency pair. So, it can be traded in a similar way how to cross currencies are traded.

From the table, we can ascertain that the magnitude of the percentages is higher for lower volatilities and comparatively lower for high volatilities. And the median costs lie in an average column.

If you are a trader who requires low costs, then you will have to bear with the high volatility. Or if you’re a trader who needs low volatility, then you must be able to bear with high costs. Finally, traders who wish to have a balance between the two, then they may trade during those times when the volatility is around the average values (in the trading range table).

Inculcating strategies that require limit order and not market orders can help reduce costs significantly. This is because limit orders do not consider the slippage factor in calculating the total costs. That is, in our example, the total cost of each trade would reduce by three pips.

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Forex Assets

Asset Analysis – USD/RON Forex Exotic Currency Pair

Introduction

USDRON is the abbreviation for the US Dollar against the Romanian Leu. This pair comes under the roof of emerging currency pairs. The volume in this pair is pretty low, and the volatility is high. Here, the US Dollar is referred to as the base currency and the RON the quote currency.

Understanding USD/RON

The fluctuating price in the exchange market specifies the value of RON equivalent to one USD. It is quoted as 1 USD per X RON. For instance, if the market price of this pair is 4.4723, then about 4½ RON is required to buy one US Dollar.

Spread

Spread is the difference between the bid and the ask prices set by the broker. It is not the same with all brokers. It also varies from the type of execution model used by the broker.

ECN: 19 pips | STP: 21 pips

Fees

The fee is the commission that is paid to the broker on each position you take. This, too, varies from the type of execution model. Typically, there is no fee on STP accounts. However, there are a few pips of fee on ECN accounts.

Slippage

Slippage is the difference between the price requested by the client and the price he actually got from the broker. This happens only on market orders. The primary reasons for its occurrence are,

Market’s volatility

Broker’s execution speed

Trading Range in USD/RON

A trading range is the representation of the pip movement in a currency pair for different timeframes. With these values, we can determine the gain or loss in a trade for a specified time frame. All that must be done is, multiply the required value from the below table with the pip value. This will yield the profit/loss for one standard lot.

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.

USD/RON Cost as a Percent of the Trading Range

Apart from assessing the profit or loss on a trade, we can also determine how the cost varies as the volatility changes. Below is a tabular representation of the same.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 19 + 3 = 25

STP Model Account

Spread = 21 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 21 + 0 = 24

The Ideal way to trade the USD/RON

Trading emerging currency pairs is different from trading major and e pairs. This pair’s high volatility and low trading volume make it infeasible to trade any time during the day. So let’s take some info out from the above tables and try finding the ideal times to enter this pair.

From the table, it can be ascertained that the percentage values are high in the min column and pretty low in the max column. This means that the total costs on the trade increases as the volatility decreases. So, to have equilibrium between the two, it is perfect to enter during those times when the volatility is around the average values. This will ensure both sufficient volatility and affordable costs.

Another simple technique to reduce total costs is by trading using limit and stop orders instead of market orders. In doing so, the total costs will reduce significantly as the slippage will not be considered for limit/stop orders. The reduction in the costs is represented in the below table as follows.

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Forex Assets

Learning The Costs Involved While Trading The USD/RUB Pair

Introduction

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

Understanding USD/RUB

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

Spread

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

ECN: 21 pips | STP: 23 pips

Fees

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

ECN: 3-10 pips | STP: 0 pips

Slippage

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

Trading Range in USD/RUB

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

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a substantial period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

USD/RUB Cost as a Percent of the Trading Range

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

ECN Model Account

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

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

STP Model Account

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

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

The Ideal way to trade the USD/RUB

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

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

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

 

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Forex Assets

Understanding The USD/PLN Exotic Currency Pair

Introduction

USD/PLN is the abbreviation for the US dollar against the Polish Zloty. It is an emerging currency pair in the forex market. The volatility in this pair is high, and the trading volume is less compared to major and cross currencies. In this pair, USD is the base currency, and PLN is the quote currency.

Understanding USD/PLN

The value of this pair determines the value of PLN that is equal to one US dollar. It is quoted as 1 USD per X PLN. For example, if the value of this pair is 3.8146, then around 4 PLN is required to buy one USD.

Spread

In forex, one of the most used terms is the spread. Spread is the difference between the bid price and the ask price of the market. This value is decided by the broker and varies from the type of account model.

ECN: 18 pips | STP: 21 pips

Fees

There is some fee on every trade you execute. And this, too, varies from type of account model. For instance, there is no fee on the STP account and a few pips on ECN accounts.

Slippage

Slippage occurs only on market orders. By definition, it is the difference between the trader’s required price for execution and the actual price the order was executed. This value depends on the broker’s execution speed and the market’s volatility.

Trading Range in USD/PLN

Assessing the profit that you can make and the loss that you can incur is a vital risk management tool. And below is a table that represents the minimum, average, and maximum volatility in different timeframes, which will help determine profit/loss values.

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 large period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

USD/PLN Cost as a Percent of the Trading Range

An excellent application to the above table is the cost as a Percent of the Trading Range. The below tables illustrate how the cost varies based on the volatility of the market. And these values will help us an idea on the best times of the day to enter into this currency pair.

ECN Model Account

Spread = 18 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 18 + 3 = 24

STP Model Account

Spread = 21 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 21 + 0 = 24

The Ideal way to trade the USD/PLN

Before getting right into it, let us comprehend what the tables actually mean. The higher the value of the percentage, the higher is the cost of the trade and vice versa. From the table, we can clearly ascertain that the percentages are high in the first (min) column, indicating that the costs are high when the market volatility is low.

Now, talking the ideal time to trade this currency pair, you may trade this pair during those times when the volatility is above the average values. In doing so, you will be assured with sufficient volatility and low costs as well.

Furthermore, if you wish to reduce your costs much more, you may place orders using the limit/stop instead of the market. This will completely nullify the slippage on the trade and will, in turn, bring down the total costs significantly. As an example, the above table, when the slippage is made, is nil is illustrated below.

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Forex Assets

Asset Analysis – EUR/HKD Exotic Currency Pair

Introduction

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

Understanding EUR/HKD

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

Spread

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

ECN: 17 pips | STP: 18 pips

Fees

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

Slippage

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

  • Broker’s execution speed
  • Market’s volatility

Trading Range in EUR/HKD

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

Procedure to assess Pip Ranges

  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 large 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/HKD Cost as a Percent of the Trading Range

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

ECN Model Account

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

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

STP Model Account

Spread = 18 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 18 + 0 = 21

The Ideal way to trade the EUR/HKD

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

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

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

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

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Forex Assets

Everything About The USD/MXN Forex Currency Pair

Introduction

USDMXN is the abbreviation for the US Dollar against the Mexican Peso. It is classified as an exotic currency pair that usually has high volatility and low trading volume. Here, the US Dollar (on the left) is the base currency, and the MXN (on the right) is the quote currency.

Understanding USD/MXN

The market price of USDMXN represents the value of MXN that are required to purchase to one US Dollar. It is quoted as 1 USD per X MXN. So, if the market price of this pair is 18.7615, then this amount of MXN is required to buy one USD.

Spread

The difference between the bid and the ask price is referred to as the spread. Its value varies from the type of execution model of the broker.

ECN: 16 pips | STP: 17 pips

Fees

For every position a client takes from the broker, he must pay some fee on each. Note that there is no fee on STP accounts. However, there are few pips of fees on ECN accounts.

Slippage

The difference between the price requested by the client and the price that was given by the broker is referred to as the slippage. Its value depends on the volatility of the market and the broker’s execution.

Trading Range in USD/MXN

Assessing the amount of money you will win and lose beforehand, in a particular timeframe is critical in trading. Below is a volatility table through which one can determine the minimum, average, and maximum profit/loss they can encounter in a specified timeframe.

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.

USD/MXN Cost as a Percent of the Trading Range

By applying the total cost to the above table, we can even determine the cost variation in a trade. The ratio between the two expressed in percentage will help us determine the ideal times of the day to trade the currency pair.

ECN Model Account

Spread = 16 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 16 + 3 = 22

STP Model Account

Spread = 17 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 17 + 0 = 20

The Ideal way to trade the USD/MXN

Comprehending the above tables is simple. The percentage values are directly proportional to the total cost of the trade. It is seen that the percentages are comparatively high on the min column and vice versa. Now, coming to the ideal time to enter the market, it would be when the volatility of USDMXN is somewhere around the average pip movement. Trading in such moments will ensure low costs as well as lower liquidity.

Furthermore, you reduce costs by placing orders using limit/pending orders instead of market orders. This will significantly bring down the total costs as the slippage will be zero at this point in time. I hope this article will help you trade this pair in a much efficient way. Cheers!

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Forex Assets

Understanding The Trading Costs Involved In USD/TRY Exotic Currency Pair

Introduction

USDTRY, an exotic currency pair, is the abbreviation for the US Dollar against the Turkish Lira. One can expect high volatility in these pairs. Here, the US Dollar is called the base currency and TRY the quote currency.

Understanding USD/TRY

The value of USDTRY depicts the value of TRY equivalent to one USD. It is quoted as 1 USD per X TRY. So, if the market value of this pair is 5.9878, then 5.9878 Liras are required to buy one US Dollar.

Spread

Spread is the difference between the bid price in the market and the ask price in the market. These prices are set by the brokers. Hence, the prices from each broker differ. Moreover, it varies from the type of execution as well.

ECN: 12 pips | STP: 14 pips

Fees

The commission that you pay to your broker for taking a position in a currency pair is a fee on the trade. This, too, depends on the type of execution model. There is typically no fee on STP accounts. And on ECN accounts, there are a few pips of fees.

Slippage

Slippage is the difference between the trader’s requested price and the broker’s executed price. It depends on two factors, namely, the broker’s execution speed and market volatility.

Trading Range in USD/TRY

The trading range is the range of the pip movement in a currency pair on different timeframes. With it, traders can determine their minimum, average, and maximum risk on a trade in 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 determine 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.

USD/TRY Cost as a Percent of the Trading Range

Apart from knowing how many pips the market moves in a given timeframe, it is also necessary to understand the total cost variation in a trade. And below are two tables (for ECN and STP) that will help determine the best time of the day to trade in the currency pair with reduced costs.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 3 + 12 + 3 = 18

STP Model Account

Spread = 14 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 14 + 0 = 17

The Ideal way to trade the USD/TRY

The costs on major currencies are pretty low, and the volatility is great. So it is ideal to enter any time in the market to trade these pairs. But, when it comes to exotic pairs, the volatility, as well as the costs, are quite high. Hence, one must be aware of when exactly they should trade these currencies.

The percentages in the above tables are directly proportional to the volatility of the market. Hence, we can conclude that costs are when the volatility is low and vice versa.

To determine the ideal times of the day to trade, you must glance at the volatility table and check if the current volatility if nearby the average values mentioned in the tables. If they are more or less in that range, you are good to trade that currency pair because this will assure a balance between both volatilities as well as costs.

Also, another simple way to reduce costs is by getting rid of the slippage on the trade. This can be done by executing orders using limit orders instead of market orders. In doing so, the total costs will reduce by a significant amount, and so will the cost of the trade.

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Forex Assets

Analyzing The USD/HUF Forex Exotic Currency Pair

Introduction

The US Dollar versus the Hungarian Forint, in short, is represented as USDHUF. It is an exotic currency pair in the forex market. It has got high volatility and lower volume compared to major and minor currencies. Here, USD is the base currency, and HUF is the quote currency.

Understanding USD/HUF

The value of this pair represents the number of HUF that are required to buy one US Dollar. It is quoted as 1 USD per X HUF. If the current market price of USDHUF is 307.72, these many Hungarian Forints are needed to purchase one unit of USD.

Spread

Spread is the primary way through which brokers generate revenue from their clients. The pip difference between the bid price and the ask price is their revenue, which is referred to as the spread. Spread is different on ECN accounts and STP accounts.

ECN: 16 pips | STP: 15 pips

Fees

On ECN accounts, one has to pay some pips of fee on each position you take. The fee is usually high on exotic pairs and comparatively less on major and minor pairs. However, on STP accounts, the fee is nil.

Slippage

Slippage in trading is the difference between the client’s intended price and the price the broker actually gave him. Slippage is affected by two factors:

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

Trading Range in USD/HUF

The representation of the minimum, average, and maximum volatility of a currency pair is the trading range. It shows the volatility of the market in different timeframes. And these values help in figuring the profit that can be gained or 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.

USD/HUF Cost as a Percent of the Trading Range

Cost as a per cent of the trading range is the representation of the cost discrepancies for different volatilities and timeframes. With these values, we can determine the moments of the day when the costs are less. And this shall be discussed in detail in the next topic.

ECN Model Account

Spread = 16 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 16 + 3 = 22

STP Model Account

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

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

The Ideal way to trade the USD/HUF

We know that exotic currency pairs typically have high volatility and low trading volume. Also, the total costs on trade are pretty expensive. Hence, one must be choosy while deciding when to enter the market.

The higher percentage values in the min column represent that the costs are high when the volatility of the market is low. And the opposite is the case for lower percentage values. However, it is not ideal to trade during any of these times.

One may trade these currency pairs during those times of the day when the volatility values are around the average values. This will ensure decent volatility as well as low costs on the trade.

Furthermore, another simple way to reduce costs is by trading using limit orders and not market orders. Because this will take away the slippage on the total cost, and this will, in turn, reduce the total cost significantly. An example of the same is given below.

With slippage

Spread = 16 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 16 + 3 = 22

Without slippage

Spread = 16 | Slippage = 0 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 0 + 16 + 3 = 19

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Forex Assets

USD/DKK – Analyzing the Exotic Forex Pair

Introduction

USD/DKK is the abbreviation for the US Dollar against the Danish Krone. This pair is considered as an exotic currency pair that typically presents high volatility and low trading volume. The US Dollar is the base currency, and the Danish Krone is the quote currency.

Understanding USD/DKK

The value of USD/DKK represents the value of DKK that is equivalent to one US Dollar. It is quoted as 1 USD per X DKK. So, if the current value of this pair is 6.9868, then these many Danish Krones are required to purchase one US Dollar.

Spread

Spread is the difference between the bid and the ask price of a currency pair. It is the primary way through which brokers generate revenue. It varies from broker to broker and also the model of execution.

ECN: 14 pips | STP: 15 pips

Fees

The fee is simply the commission that you pay on each trade you take.

Fee on ECN – 3-6

Fee on STP – 0

Slippage

Slippage is the difference between the price which was intended by the client and the price he got from the broker. This difference changes with the market’s volatility and the broker’s execution speed. Slippage on exotic pairs is typically high.

Trading Range in USD/DKK

As it is pretty evident from the table, the trading range is an illustration of the pip movement in a currency pair in different timeframes. These values help us determine the minimum, average, and maximum profit or loss that can be incurred in a trade during a specified time frame. Another application for this table is discussed in the next topic.

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 an extensive period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

USD/DKK Cost as a Percent of the Trading Range

Cost as a percent of the trading range is an application to the above volatility table. The below two tables depict the total cost variation in different volatilities and timeframes for ECN and STP accounts.

Note: The percentages are obtained by finding the ratio between the total cost and the pip movement values in the above table.

ECN Model Account

Spread = 14 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 14 + 3 = 20

STP Model Account

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

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

The Ideal way to trade the USD/DKK

What do the percentage values mean? Comprehending the above tables is simple. The higher the magnitude of the percentage, the higher are the costs for that particular volatility and timeframe. Similarly, lower percentage values mean that the costs are low.

Trading during high volatilities or when the cost is high is not ideal. So, to ensure an equilibrium between the two, it is best to enter the market during those times when the volatility is around the mid values illustrated in the volatility table.

Apart from this, one can reduce their total costs significantly by placing orders using limit/pending orders instead of market orders. This will altogether remove the slippage factor on the total cost and bring down its value by a high number.

As already mentioned, exotic currency pairs are highly volatile and have low trading volume. This results in higher costs on the trade. Hence, if you really want to trade this pair, it is recommended to follow the above-mentioned mentioned techniques to reduce costs by a considerable amount. Cheers!

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Forex Assets

Understanding The USD/THB Exotic Forex Pair

Introduction

USD/THB is the abbreviation for the US Dollar versus Thailand’s Thai Baht. It is an exotic currency pair which usually has high volatility and low trading volume. US Dollar, in this pair, is the base currency, and the Thai Baht is the quote currency.

Understanding USD/THB

The value of USDTHB represents the number of THB that are equivalent to one USD. It is quoted as 1 USD per X THB. So, if the market price of this pair is 30.98, then one has to produce 30.98 THB to buy one USD.

Spread

Spread is the difference between the bid and the ask price of the currency pair set by the brokers. It typically varies from broker to broker and also from the type of order execution. The spreads on ECN and STP accounts are as shown below.

ECN: 10 pips | STP: 11 pips

Fees

There is a fee associated with every trade you take. The fee is also referred to as the commission on the trade. Its value is usually a constant but varies from the type of execution model. The fee on STP accounts is nil, while there are a few pips of fee on ECN accounts.

Slippage

Slippage is the difference between the trader’s required price and the price at which his trade was executed. Since exotic pairs are highly volatile, the slippage is quite high.

Trading Range in USD/THB

Below we shoe a table representation of the minimum, average, and maximum pip movement in a currency pair. These values help us determine the profit or loss that can be made on a trade in a given amount of time. All you have to do is, multiply any one of the below values with the value per pip ($32.26). The result is the potential profit gained or lost on the trade for one bar of the timeframe.

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 period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

USD/THB Cost as a Percent of the Trading Range

The cost as a trading range represents the cost variation in trade in different volatilities of the market. It is presented in percentages of the total range. Thus, it helps determine the best moments to enter the market to ensure lower costs.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 10 + 3 + 3 = 16

STP Model Account

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

Total cost = Slippage + Spread + Trading Fee = 11 + 3 + 0 = 14

The Ideal way to trade the USD/THB

Trading exotic pairs are different from trading the major and minor pairs. However, there are times when one can trade this pair by making attempts to reduce the costs.

The magnitude of the percentages represents the costs of the trade. The higher the percentages, the higher are the costs on the trade. It can be seen from tables that the costs are high on the min column and comparatively lower in the max column. This clearly means the costs are high during high volatilities and vice versa.

However, when it comes to determining the right time to trade, one must trade during those moments when the volatility is around the higher values because this will ensure pretty great volatility as well as low costs.

Furthermore, another simple way to reduce costs is by trading using limit/stop orders instead of market orders. Limit orders will eliminate the slippage and significantly reduce the total cost of the trade.

Finally, we can see that we must be pretty sure of the direction and extension of the trend to trade the USDTHB, and avoid trading it intraday. Using the daily chart and limit orders, we still would need almost 4 Hours of a positive movement (with the trade) to pay the costs. Therefore we practical setups would ask for at least 2-3 days of market action for propper reward-to-risk factors.

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Forex Assets

What Should You Know Before Trading The CHF/JPY Currency Pair

Introduction

CHFJPY is a symbolic representation of the Swiss franc against the Japanese yen. Here, CHF is the base currency, and JPY is the quote currency. Since it does not have USD involved, it is classified as a cross-currency pair.

Understanding CHF/JPY

The market price of this pair is the number of JPY that are required to purchase one CHF. It is quoted as 1 CHF per X JPY. For example, it’s current value is 112.31, then 112.31 yen are needed to buy one Swiss franc.

Spread

Spread in forex is the difference between the bid price of a currency and the ask price of it. And this pip difference is used up by the brokers as a form of fee. However, it is not a fixed value. It varies from brokers to brokers.

ECN: 1.3 | STP: 2.1

Fees

Spread is not the only form of fee that is levied by the brokers. There is a commission on the trade as well. The commission is nil on STP accounts, but pips on ECN accounts.

Slippage

When entering a trade using market orders, the trader does not get the exact price he intended when he executed it. There might be a difference in pips. This difference is referred to as slippage. Slippage may be in favor of or against the trader.

Trading Range in CHF/JPY

The trading range is simply a representation of the minimum, average, and maximum pip movement in a currency pair. With these values, one can assess how much money a trader will be risking in a particular timeframe. For example, if the average pip movement on the 4H in this pair is 15 pips, then a trader can expect to win or lose $150.6 in about 4H or so.

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 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/JPY Cost as a Percent of the Trading Range

Apart from knowing the profit or loss can one can incur in a given timeframe, it is necessary to assess the cost of these trades as well. Below is a table that represents the cost variation in different volatilities. And these costs are determined by finding the ratio between the total cost and the volatility.

ECN Model Account

Spread = 1.3 | Slippage = 2 |Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 1.3 + 1 = 4.3

STP Model Account

Spread = 2.1 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 2.1 + 0 = 4.1

The Ideal way to trade the CHF/JPY

The forex market is open 24hours. However, it is not ideal to enter the market at any time. There are times when the costs are low, and times when it’s high.

The percentages in the table are directly proportional to the costs of the trade. It is seen that the percentages are high in the minimum column, and low in the maximum column. Hence, we can conclude that costs are inversely proportional to the volatility of the market. Now, when it comes to choosing the right time to trade, it is best to enter during those times when the volatility of the market is around the average values. This will ensure enough volatility in the market and low costs as well.

In addition, placing orders using limit/pending orders reduces costs too because this will completely nullify the slippage on the trade and will bring down the total cost significantly.

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Forex Assets

Analyzing The CAD/JPY Forex Asset Class

Introduction

CADJPY is the abbreviation for the currency pair, the Canadian dollar against the Japanese yen. This pair is one of the most extensively traded cross currency pairs. In CADJPY, CAD is referred to as the base currency and JPY as the quote currency.

Understanding CAD/JPY

The value of CADJPY is the value of JPY, which is required to purchase one CAD. It is quoted as 1 CAD per X JPY. For example, if the current market price of this pair is 82.651, then these many units of Japanese yen are needed to buy one Canadian dollar.

Spread

The bid price is the price used to sell a currency, and ask price is the price used to buy a currency. There is always a difference between the two prices. This difference is called the spread. It varies from broker to broker and also the type of their execution model.

ECN: 1.1 | STP: 2

Fees

Similar to stockbrokers, there are forex brokers who charge a few pips of fee on each position a trader opens and closes. This fee is no different from the commission brokers levy. On STP accounts, the fee is nil, while on ECN accounts, it is between 6-10 pips depending on the broker one is using.

Slippage

Slippage in trading is the difference between the price requested by the trader and the price he actually received. The two factors responsible for slippage are,

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

Trading Range in CAD/JPY

A trading range is a tabular representation of the number of pips a currency pair moved in a given timeframe. It represents the minimum, average as well as the maximum pip movement in six different timeframes. These values prove to be important for assessing one’s risk on a trade. For example, if the minimum pip movement in CADJPY on the 4H timeframe is ten pips, then a trader can expect to lose $917 in about 4H.

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 large 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/JPY Cost as a Percent of the Trading Range

As already mentioned, there is a fee for every trade you take. And knowing the percent fee on the trades you are taking is important, as it depends on the volatility of the market and the timeframe you are trading.

Below is a representation of the total cost variation on trade in terms of percentages. Since costs on ECN accounts are different from STP accounts, we have two separate tables for this concept.

ECN Model Account

Spread = 1.1 | Slippage = 2 |Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 1.1 + 1 = 4.1

STP Model Account

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

Total cost = Slippage + Spread + Trading Fee = 2 + 2 + 0 = 4

The Ideal way to trade the CAD/JPY

Before getting right into it, let us comprehend the above tables. The higher the values of the percentages, the higher are the costs on the trade. It is pretty evident from the table that, percentage values are on the higher side in the min column and comparatively lower in the max column. This means that the costs are high when the volatility of the market is low and vice versa. Also, the trades that are taken based on a long term perspective, the costs are considerably low.

One may trade the high volatility markets to minimize your costs, or trade during low volatility by paying high costs. However, it is ideal to enter during those times of the day when the volatility is close to the average values. During these times, one can expect comparatively low costs with enough volatility as well.

On a further note, another simple and effective way to reduce costs is by trading using limit orders. This entry method will take slippage out of the total costs and bring down its value considerably. An example of the same is given below.

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

Total cost = Slippage + Spread + Trading Fee = 2 + 0 + 0 = 2

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Forex Assets

Fundamentals Of CAD/CHF Forex Currency Pair

Introduction

CAD/CHF is a currency pair where two currencies, namely, the Canadian dollar and the Swiss franc, are involved. It is a cross-currency pair. Here, CAD is called the based currency, and CHF is called the quote currency.

Understanding CAD/CHF

The current market price of CADCHF tells the value of CHF equivalent to one CAD. It is represented as 1 CAD per X CHF. For example, if the value of CADCHF in the market is 0.7372, then one must pay 0.7372 Swiss francs to buy one Canadian dollar.

Spread

In simple terms, the spread is the difference between the bid price and the ask price set by the brokers. It is not a fixed value and differs from time to time and broker to broker. It also varies based on the type of execution model.

ECN: 1 | STP: 2

Fees

The fee is the commission that is levied by the broker on each trade a trader takes. This, too, like the spread, differs from broker to broker and the type of their execution model. Fee on ECN accounts is 6-10 pips, while it is nil on STP accounts.

Slippage

Slippage is the difference between the trader’s executed price and the price he actually received from the broker. There is always this difference due to the volatility of the market and the broker’s trade execution speed. Note that slippage only happens on market orders.

Trading Range in CAD/CHF

Apart from analyzing the direction of the market, one must predetermine their risk and reward based on the volatility and the timeframe. Knowing how much a trader will gain or lose in a given time frame is a vital trade management tool. And below is a table through which one can determine their profit/loss that can be made in a specified timeframe. For example, the average pip movement on the 1H timeframe is 6.8. So, a trader can expect to be in a profit of $68.34 or in a loss of the same amount.

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/CHF Cost as a Percent of the Trading Range

An application to the above volatility table is to find the cost differences on trades by considering the volatility and the total cost on a trade. Below is the table that illustrates the variation in cost on a trade, in terms of percentage. The comprehension of it is discussed in the subsequent topic.

ECN Model Account

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

Total cost = Slippage + Spread + Trading Fee = 2 + 1 + 1 = 4

STP Model Account

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

Total cost = Slippage + Spread + Trading Fee = 2 + 2 + 0 = 2

The Ideal way to trade the CAD/CHF

The higher the magnitude of the percentage, the higher is the cost of the trade.

The values in the table are least in the min column and highest in the max column. This simply means that the costs are high when the volatility of the market is low and vice versa.

In the average column, the values are not as low as in the max column, and not as high as in the max column. The volatility here is moderate too. Hence, this becomes our ideal time of the day to trade in the market.

To sum it up, one must trade during those times of the day when the volatility is more or less near the average values. This will ensure decent volatility as well as minimal costs.

There is another simple technique to reduce costs on trade. When trades are executed using limit order instead of market orders, the slippage becomes nil. So, this brings down the total cost of the trade by a significant value.

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Forex Assets

Basics Of Trading The AUD/CHF Currency Pair & Analyzing The Trading Costs Involved

Introduction

AUDCHF is the abbreviation for the Australian dollar and the Swiss franc. It is a cross-currency pair in the market. AUD being on the left is the base currency, and CHF (on the right) is the quote currency. One can expect high volatility and liquidity during the Australian session.

Understanding AUD/CHF

The value of AUDCHF represents the amount of Swiss Francs required to buy one Australian dollar. It is quoted as 1 AUD per X CHF. For example, if the value of AUDCHF is 0.6885, then this number represents the CHF that is to be produced by the trader to buy one AUD.

AUD/CHF Specification

Spread

Spread is the difference between the bid price and the ask price of the market set by the brokers. It is not a fixed value. It differs from the account type as well as the broker.

ECN: 0.7 | STP: 1.7

Fees

Brokers charge a fee on every trade a trader takes. It could be per execution or finished trade (round trip). Also, it varies from the type of account model. Typically, fee on ECN type is 5-10 pips, and 0 on STP type.

Slippage

Slippage is the difference between the price demanded by the trader and the price he actually received from the broker. There is always a variation in this due to the broker’s execution speed and market volatility.

Trading Range in AUD/CHF

Wanting to know how much profit one can make in a given time? If so, then you may find the answer in the table illustrated below. This table is the representation of the min, average, and max volatility of the currency pair in different timeframes. And with these values in the table, one can determine the profit 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 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/CHF Cost as a Percent of the Trading Range

The cost as a percent of the trading range is determined in the following table using different volatilities, assuming that the trading range can be seen as the potential profit on a given timeframe. The percentages are obtained by finding the ratio between the total cost of the trade and the range values. These values, thus, help in assessing the right moments in the day to trade the currency pair.

ECN Model Account

Spread = 0.7 | Slippage = 2 |Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 0.7 + 1 = 3.7

STP Model Account

Spread = 1.7 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 1.7 + 0 = 3.7

The Ideal way to trade the AUD/CHF

Firstly, the higher the value of the percentage, the higher is the cost of the trade. It is pretty evident from the above tables that the costs are higher in the min column and keep decreasing in the subsequent columns. Meaning, as the volatility increases, the total cost of the trade reduces. But, it is not ideal to trade in either of the extremes. To have an affordable cost and optimal volatility, it is best to enter during those times of the day when the pip movement for the pair is more or less equal to the average values.

Furthermore, the total cost can easily be reduced by trading using limit order instead of market orders. This methodology would bring down the slippage to zero. Hence, significantly affecting the percentage values. And an example of the same is depicted below.

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Forex Assets

Understanding The Basics Of NZD/CHF Forex Pair

Introduction

NZDCHF is a cross-currency pair in the Forex market. It is an abbreviation for the New Zealand dollar and the Swiss franc. Here, NZD is the base currency, and CHF is the quote currency.

Understanding NZD/CHF

The value of NZDCHF simply represents the units of CHF equivalent to one unit of NZD. It is quoted as 1 NZD per X CHF. For example, in the market, if the price of NZDCHF is 0.64535, then it requires those many units of CHF to buy one NZD.

NZD/CHF Specification

Spread

The bid price and ask price in the market is typically not the same. The difference between these two prices is referred to as the spread. And this difference amount is used by the broker. It varies from the type of account model.

ECN: 1.1 | STP: 1.9

Fees

The fee is basically the commission that has to be paid on each trade you take. It varies from broker to broker and their execution type. Typically, there is no fee on STP accounts, but a few pips on ECN accounts.

Slippage

Another type of fee traders have to bear is the slippage. It is the difference between the trader’s requested price and the broker’s executed price. Slippage always is changing due to the ups and downs in market volatility and the broker’s execution speed.

Trading Range in NZD/CHF

Many novice traders randomly take trades without determining the amount they’re going to risk. The trading range is that representation, which indirectly illustrates the risk and profit area in a trade, in a given time frame. For example, if the average pip movement on NZDCAD on the 4H timeframe is 20 pips, then the trader will be risking $205.4 in an hour on an average.

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/CHF Cost as a Percent of the Trading Range

Apart from knowing the profit/loss that can be made from a trade in a given time, it is also necessary to know the cost variation in different volatilities and timeframes. Below is a table representing the cost as a percentage that is obtained by considering the volatility, timeframe, and the total cost on a trade.

ECN Model Account 

Spread = 1.1 | Slippage = 2 |Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 1.1 + 1 = 4.1

STP Model Account

Spread = 1.9 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 1.9 + 0 = 3.9

The Ideal way to trade the NZD/CHF

Trading on any timeframe and during any volatility is not an efficient way of trading. There are specific times in the market when you must enter/exit. This can be determined from the above two tables. Firstly, the higher the magnitude of the percentage, the higher is the cost of a trade for that particular timeframe and volatility. It can be ascertained from the table that the costs are low for high volatilities and high for low volatilities. And neither of the two states is ideal to trade. To keep your cost affordable and volatility moderate, it is ideal to trade when the volatility is nearby the average values.

Furthermore, it is recommended to have strategies that enable the use of limit orders. Because trading with limit orders will completely cut off the slippage on the trade Nullifying it, the total cost will significantly reduce, which, in turn, will reduce the cost percentage as well. For example, it was observed that cost percentages were reduced by about 50% when the slippage was removed.

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Forex Assets

What Should You Know Before Trading The NZD/CAD Currency Pair

Introduction

NZDCAD is the abbreviation for the currency pair New Zealand dollar against the Canadian dollar. It is referred to as a cross-currency pair. Here, NZD is the base currency, and CAD is the quote currency. In this article, we shall be going over everything you need to know about this currency. Firstly, let’s get started by understanding what the value of NZDCAD depicts.

Understanding NZD/CAD

Comprehending the value of a currency pair is simple. The value of NZDCAD determines the Canadian dollars that must be paid to buy one New Zealand dollar. It quoted as 1 NZD per X CAD. For example, if the current value of NZDCAD is 0.86595, then 0.86595 CAD is required to purchase one NZD.

NZD/CAD Specification

Spread

Spread is the primary way through which brokers make revenue. They have a different price for buying and selling. The difference between these prices is called the spread. It varies from broker to broker and their execution type.

ECN: 1 | STP: 1.8

Fees

For every execution, there is a fee levied by the broker. This fee is also referred to as the commission on a trade. It is nil on STP accounts. And on ECN accounts, it is usually within 6 to 10 pips.

Slippage

Slippage is the variation in the price executed by you and the price you actually received. It happens on market orders. Slippage depends on two factors:

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

Trading Range in NZD/CAD

The trading range is a tabular representation of the pip movement in a currency pair in various timeframes. These values help in assessing the risk-on trade as it determines 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/CAD Cost as a Percent of the Trading Range

Cost a percentage of the trading range is an excellent application of the above table. By manipulating the values with the total cost, the variations in costs in different at different volatilities and timeframes can be calculated. For this, the ratio between the total cost and pip movement is found out and represented in percentage.

ECN Model Account 

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

Total cost = Slippage + Spread + Trading Fee = 2 + 1 + 1 = 4

STP Model Account

Spread = 1.8 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 1.8 + 0 = 3.8

Comprehending the above tables

There are two variables here, namely, timeframe and volatility. By varying these two, the variation in the total cost is examined. Note that the higher the percentage, the higher is the cost on a trade and vice versa. From this, we can make out that the prices are high when the volatility is low. And prices are low when volatility is high. Also, as the timeframe widens, the cost decreases.

The Ideal way to trade the NZD/CAD

It is not ideal to trade when the volatility is high, as it is risky. It is also not the best choice to trade when the volatility is low, as the costs are high. So, to keep a balance between both volatility and cost, it is ideal to trade when the pip movement of the pair is around the average values.

Talking about timeframes, trading the 4H or the Daily would be great, as the cost is bearable, and the trade wouldn’t take too long to perform as well.

Another simple hack to reduce cost is by trading using limit/pending orders instead of market orders. This will significantly reduce costs on a trade because the slippage on the trade becomes 0. It is observed that the cost reduces by about 50% of the original value. Below is a table representing the cost percentage when the slippage is made zero.

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Forex Assets

Everything You Should Know About GBP/NZD Forex Pair

Introduction

GBPNZD is the abbreviation for the Great Britain pound against the New Zealand dollar. Here, the pound is the base currency, while the New Zealand dollar is the quote currency. Though it is not a major currency, it has considerable volatility and liquidity.

Understanding GBP/NZD

The value of GBPNZD represents the value of NZD equivalent to one pound. It is quoted as 1 GBP per X NZD. For example, if the value of GBPNZD is at 1.9677, then to buy one pound, the trader has to pay 1.9677 NZ dollars for it.

GBP/NZD Specification

Spread

Spread is the medium through which brokers generate revenue. They set two different prices for buying and selling a currency pair. The difference between the prices is their profit. This difference is referred to as the spread. The prices usually vary from type of account model.

ECN: 1.2 | STP: 2.1

Fees

The fee is basically the commission on each trade a trader must pay. Typically, there is no fee on STP accounts, but a small fee on ECN accounts. The fee is usually between 6 and 10 pips.

Slippage

Slippage takes place when positions are opened/closed using market orders. The trader wishes to pay a specific price, but in reality, he receives a different price. And the difference between these two prices is called slippage.

Trading Range in GBP/NZD

The trading range is the depiction of the pip movement of a currency pair on different timeframes. With it, one can analyze how many dollars they can win/lose in a given timeframe. For example, if the average pip movement on the 1H timeframe is 30 pips, then you will either be in a profit of $198.6 or a loss of $198.6 in an hour. Knowing this, a trader can plan their lot sizes accordingly.

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/NZD Cost as a Percent of the Trading Range

Having knowledge of the cost of the trade is necessary. Note that the cost varies based on the volatility and the timeframe traded. So, it becomes vital to know when the right moments to enter the market are. Below are two tables illustrating the total costs as a percentage for varying timeframes and volatility.

ECN Model Account

Spread = 1.2 | Slippage = 2 |Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 1.2 + 1 = 4.2

STP Model Account

Spread = 2.1 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 2.1 + 0 = 4.1

The Ideal way to trade the GBP/NZD

The above tables show that the costs are high in the min column and low in the max column. The higher the value of the percentage, the high is the cost. So, this means that the costs are high for low volatility markets and vice versa. It is neither ideal to trade during low volatility nor during high volatility. To have an equilibrium between the costs and the volatility, it is best to enter the market when the volatility is around the average mark.

Slippage is a parameter for calculating the total cost. It has a great weight in the total cost. However, there is a way to minimize and nullify it. This can be simply be done by trading using limit orders instead of market orders.

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Forex Assets

Fundamentals Of Trading The GBP/AUD Currency Pair

Introduction

GBPAUD is an abbreviation for the Great Britain pound and the Australian dollar. This cross currency pair is widely traded with high volume in the forex market. In this pair, GBP is the base currency, and AUD is the quote currency.

Understanding GBP/AUD

The value of GBPAUD in the market is the value of AUD equivalent to one pound.GBPAUD is quoted as 1 GBP per X AUD. For example, if the value of GBPAUD is 1.8505, then these many Australian dollars are to be given to receive one pound.

GBP/AUD Specification

Spread

The prices for buying and selling a currency pair are different. To buy, one must refer to the ask price; and to sell, one must refer to the bid price. The difference between the bid price and the ask price is called the spread. The spread varies from the type of account model.

ECN: 0.7 | STP: 1.7

Fees

Apart from the spread, brokers levy fee on every round-trip trade. This fee is fixed in for every trade. However, it varies from broker to broker. Usually, there is no fee on STP accounts. On ECN accounts, there is a fee of a few pips.

Slippage

Slippage is the difference between the price when the trader entered the market order and the price he was actually given. Most of the time, there is a variation in the prices. This difference could be in favor of or against the trader. There are two factors responsible for it. One, the volatility of the market, and two, broker’s execution speed.

Trading Range in GBP/AUD

The trading range of currency pairs simply depicts the volatility of the pair in a different timeframe. In other terms, the trading range represents the minimum, average, and maximum pip movement in different timeframes. These values are helpful in assessing one’s risk, as well as making trades much cost-effective.

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 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/AUD Cost as a Percent of the Trading Range

Cost as a percent of the trading range is a very supportive tool in analyzing the cost of a trade, in different timeframes, and at different volatilities. This is done by finding the ratio of the total cost and volatility values and then expressing it as a percentage. The comprehension of the below tables shall be discussed in the subsequent topic.

ECN Model Account 

Spread = 0.7 | Slippage = 2 |Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 0.7 + 1 = 3.7

STP Model Account

Spread = 1.7 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 1.6 + 0 = 3.7

The Ideal way to trade the GBP/AUD

Note that the higher the magnitude of the percentage, the higher is the cost of the trade. From the table shown above, we can observe that the values are highest on the min column and lowest on the max column. This means that the costs are higher when the volatility of the market is low and vice versa. Reading it horizontally, the cost gets lower as the timeframe widens. Hence, the ideal to trade when the pip movement of the currency pair is near the average values. This will ensure decent volatility by keeping the costs minimal.

Another effective way to reduce the total cost is by trading using limit orders, not market orders. Doing so, the slippage on the trade will shrink to zero. The following table shows the costs of the GBP/USD with no sleppage, for the same market conditions as on the preceding tables.

Total cost = Spread + trading fee + slippage = 0.7 +1 + 0 = 1.7

Hence, from the above table, it can be inferred that the cost percentages have a significant value.