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.
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.
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
The fee is a synonym for commission. It is levied on the ECN accounts only and not STP accounts.
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
- Add the ATR indicator to your chart
- Set the period to 1
- Add a 200-period SMA to this indicator
- Shrink the chart so you can assess a large time period
- Select your desired timeframe
- Measure the floor level and set this value as the min
- Measure the level of the 200-period SMA and set this as the average
- Measure the peak levels and set this as Max.
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.