Greenback indefinitely had a wave of risk aversion not leveraged the currency’s battered safe haven appeal. As the day wore on, data from China, Australia, Japan, the Euro Zone and the United Kingdom reflected a slowing in factory activity that seems to be reflecting a downshift in global growth. The concern was nagging; but fear that a serious economic slump could be in the works didn’t really set in until the US ISM manufacturing activity survey for July crossed the wires. The 50.9 reading was a substantial miss (below even the lowest economist forecast from Bloomberg) and threatened the primary source of growth the US economy has drawn from since the recovery was established back in 2009. In turn, the S&P 500 Index would turn a remarkable bullish gap on the open into an eventual 2.5 percent retracement through the first half of the day.
The ISM indicator, along with the other manufacturing readings from the around the world, are an important reminder that economic activity is cooling. The feeble health of the developed world’s consumer is finally meeting the global shift towards austerity (China, Euro Zone, UK). That leaves the US in a unique position: either join the stimulus withdrawal and suffer the economic slowdown; or pursue financial responsibility and potentially turn a slowdown into a double dip recession. This is another layer of complication to the deficit debate at hand. According to the original timeline; the window is supposed to close by the coming session. That said, it seems that the revised two-stage program that has garnered support from Congressional leaders and already passed the House looks to have a good chance of making it all the way through. Yet, it is still under heavy debate as to whether the planned cuts would be enough to prevent a downgrade by the major credit rating agencies. Such an outcome would surely be dollar negative. Though if this effort tips the global economy, there could be a redeeming value to the greenback.
Monday, August 1, 2011
Saturday, July 30, 2011
Greenback plunging to a record low against the Swiss franc
"The fundamental backdrop is not in favor of the dollar," said George Davis, managing director of global research at RBC Capital Markets in Toronto.
Investors are positioning for a scenario in which policy makers are unable to strike a deal, Davis said. "If we do get to the point where there is no agreement, we'll see a another leg lower in the dollar as the market prices in a more negative outlook."
Economists and politicians alike have warned that a downgrade or a default could trigger a financial panic that could rival the 2008 crisis. That helped send the dollar to its weakest level ever against the franc and a four-month low against the yen. Both are considered safe-haven currencies by market participants.
Late Friday, the euro was at $1.4391 from $1.4229 late Thursday, according to EBS via CQG. The dollar was at Y76.78 from Y77.69, while the euro was at Y110.05 from Y111.33. The U.K. pound was at $1.6414 from $1.6360. The dollar was at CHF0.7856 from CHF0.8011.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 73.750 from about 74.222.
Japan is struggling to rebuild from its nuclear and natural disaster, but with the dollar held in such poor esteem, the yen has surged as nervous traders flock to the currency as a shelter.
On the basis of its debt-to-economic-growth ratios, Japan is one of the most debt-laden major economies in the world. However, analysts say that because most of its obligations are to domestic investors, the country has little external funding needs, and therefore isn't as exposed to global economic tumult.
Japanese authorities have watched with dismay as a strong yen undercuts the country's exports, threatening to counteract rebuilding efforts. Traders were on alert for signs that Japan could intervene to weaken its currency.
"Assuming that we have failures on budget discussions here, which at this point is a pretty decent probability, then dollar/yen could break" sharply lower, said Richard Hastings, macro strategist at Global Hunter Securities. He doubted whether unilateral intervention could be effective.
That, however, didn't stop Japanese officials from warning they could do just that. Prime Minister Naoto Kan said yen moves had become one-sided--the latest and highest-ranking policy maker yet to caution the market about aggressive moves.
But a broadly weak dollar has exacerbated the strength of most currencies, creating a policy conundrum for other economies around the world. Just this week, the dollars of Canada, Australia and New Zealand all hit multiyear highs.
Investors are positioning for a scenario in which policy makers are unable to strike a deal, Davis said. "If we do get to the point where there is no agreement, we'll see a another leg lower in the dollar as the market prices in a more negative outlook."
Economists and politicians alike have warned that a downgrade or a default could trigger a financial panic that could rival the 2008 crisis. That helped send the dollar to its weakest level ever against the franc and a four-month low against the yen. Both are considered safe-haven currencies by market participants.
Late Friday, the euro was at $1.4391 from $1.4229 late Thursday, according to EBS via CQG. The dollar was at Y76.78 from Y77.69, while the euro was at Y110.05 from Y111.33. The U.K. pound was at $1.6414 from $1.6360. The dollar was at CHF0.7856 from CHF0.8011.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 73.750 from about 74.222.
Japan is struggling to rebuild from its nuclear and natural disaster, but with the dollar held in such poor esteem, the yen has surged as nervous traders flock to the currency as a shelter.
On the basis of its debt-to-economic-growth ratios, Japan is one of the most debt-laden major economies in the world. However, analysts say that because most of its obligations are to domestic investors, the country has little external funding needs, and therefore isn't as exposed to global economic tumult.
Japanese authorities have watched with dismay as a strong yen undercuts the country's exports, threatening to counteract rebuilding efforts. Traders were on alert for signs that Japan could intervene to weaken its currency.
"Assuming that we have failures on budget discussions here, which at this point is a pretty decent probability, then dollar/yen could break" sharply lower, said Richard Hastings, macro strategist at Global Hunter Securities. He doubted whether unilateral intervention could be effective.
That, however, didn't stop Japanese officials from warning they could do just that. Prime Minister Naoto Kan said yen moves had become one-sided--the latest and highest-ranking policy maker yet to caution the market about aggressive moves.
But a broadly weak dollar has exacerbated the strength of most currencies, creating a policy conundrum for other economies around the world. Just this week, the dollars of Canada, Australia and New Zealand all hit multiyear highs.
Friday, July 29, 2011
Euro fell - debt crisis spreading beyond Greece
The euro fell against all of its major counterparts today, as the fear of the debt crisis spreading beyond Greece and other troubled countries of the Eurozone.
The euro is currently demonstrating a second bearish day in a row against the US dollar, the Great Britain pound and the Japanese yen. It is falling against the dollar despite the stalemate in the US debt-limit discussions, which may lead to a technical default on August 2.
Greece’s long-term sovereign credit rating was reduced to CC by Standard & Poor’s yesterday. It was also reported by the agency that the proposed measures (by the European Union) will push the rating to SD (selective default), as it will result in losses for the commercial creditors. Meanwhile, Moody’s downgraded Cyrpus from A2 to Baa1 with a negative outlook on its government bonds.
EUR/USD fell from 1.4368 to 1.4304 as of 17:12 GMT; it traded as low as 1.4254 earlier today. Yesterday, the pair opened at 1.4512. EUR/GBP declined from 0.8797
The euro is currently demonstrating a second bearish day in a row against the US dollar, the Great Britain pound and the Japanese yen. It is falling against the dollar despite the stalemate in the US debt-limit discussions, which may lead to a technical default on August 2.
Greece’s long-term sovereign credit rating was reduced to CC by Standard & Poor’s yesterday. It was also reported by the agency that the proposed measures (by the European Union) will push the rating to SD (selective default), as it will result in losses for the commercial creditors. Meanwhile, Moody’s downgraded Cyrpus from A2 to Baa1 with a negative outlook on its government bonds.
EUR/USD fell from 1.4368 to 1.4304 as of 17:12 GMT; it traded as low as 1.4254 earlier today. Yesterday, the pair opened at 1.4512. EUR/GBP declined from 0.8797
Wednesday, July 27, 2011
crude fell more than $1 a barrel to below $115 on Tuesday
Oil prices dropped around 2 percent earlier after CME Group Inc (CME.O), the world's largest commodities exchange, raised the margin call for crude futures by 25 percent as volatility soared. The margin hike was the fourth since February, when civil war in Libya cut its crude exports.
Brent crude fell $1.22 to $114.68 a barrel by 0622 GMT, after posting the second-largest gain on record on Monday. U.S. crude tumbled $1.59 to $100.97, erasing nearly a third of the previous day's gain of more than $5.
China's April crude oil imports rose 1.7 percent from a year earlier to 5.24 million barrels per day (bpd), their third highest, official data showed on Tuesday.
"People are still trying to figure out how much monetary tightening will play a role in slowing growth over the next quarters," said Jeremy Friesen, commodity strategist at Societe Generale.
"The numbers from China were pretty good. People are now going to be paying attention to whether you see a real drop in demand," related to high prices and tight monetary policy, he said.
Exports from China grew at a faster-than-expected rate of 29.9 percent in April, propelling the country's trade surplus to the largest in four months. While expansion is bullish for oil, fast growth could force the government to take more steps to cool the growth and slow the pace of rising demand.
MARGINS
The cumulative increase in margins to maintain positions on U.S. crude benchmark West Texas Intermediate since February is 67 percent, with the cost rising to $6,250 per contract from $3,750.
"Having high margin requirements makes it more difficult for speculative traders to enter the market, so naturally that will cause less speculative activity in oil markets," said Ben Westmore, commodity economist at National Australia Bank.
Margins are deposits paid by investors in futures markets, where full payment is made when contracts mature, to an exchange or clearing house to cover the risk of default and are based on the largest most-likely daily market move.
CME's move comes after a volatile week of oil trading that saw U.S. crude prices fall from over $114 a barrel -- the highest level since 2008 -- to $94 a barrel.
That drop was part of a wider commodities sell-off last week, spurred in part by steep margin increases of 84 percent in silver over the past two weeks.
The margin hike impact on oil prices may be less severe than in silver, which fell more than 30 percent from a record high in late April due to a succession of margin hikes that nearly doubled trading costs for the precious metal.
"It won't be as significant as the impact on the silver market because silver prices have just risen so strongly and based very little on fundamentals," Westmore said.
Volatility remained high with the Chicago Board Options Exchange's oil volatility index .OVX up 0.65, or 1.57 percent, at 42.09 on Tuesday. The index touched 48.64 last Thursday, the highest in nearly a year.
Oil markets are also under pressure from a downgrade of Greece's credit rating by Standard and Poor's. The cut further into the junk category reflects growing doubts that the euro zone's most fragile economy can manage its debt without imposing losses on private bondholders.
A troubled euro zone economy has bearish implications for dollar-denominated crude prices not only because any dollar gain against the euro makes crude costlier in Europe, but because Europe's economic woes may curb its oil demand.
Technical charts showed Brent was expected to retrace to $110.84 per barrel, as a rebound that started from the May 6 low of $105.15 has been completed, while U.S. oil faces a strong resistance at $102.88 and is expected to retrace to $99 per barrel, Reuters market analyst Wang Tao said.
SUPPORTING PRICES
Bearish sentiment was limited by rising concerns over U.S. gasoline supply ahead of the summer driving season.
A Reuters poll ahead of weekly industry and government reports forecast U.S. gasoline supplies had eased last week for the 12th consecutive time, falling 100,000 barrels, while crude stockpiles rose 1.3 million barrels.
U.S. gasoline futures rose 0.66 cents to $3.2855 a gallon, after jumping 6 percent on Monday.
Brent crude fell $1.22 to $114.68 a barrel by 0622 GMT, after posting the second-largest gain on record on Monday. U.S. crude tumbled $1.59 to $100.97, erasing nearly a third of the previous day's gain of more than $5.
China's April crude oil imports rose 1.7 percent from a year earlier to 5.24 million barrels per day (bpd), their third highest, official data showed on Tuesday.
"People are still trying to figure out how much monetary tightening will play a role in slowing growth over the next quarters," said Jeremy Friesen, commodity strategist at Societe Generale.
"The numbers from China were pretty good. People are now going to be paying attention to whether you see a real drop in demand," related to high prices and tight monetary policy, he said.
Exports from China grew at a faster-than-expected rate of 29.9 percent in April, propelling the country's trade surplus to the largest in four months. While expansion is bullish for oil, fast growth could force the government to take more steps to cool the growth and slow the pace of rising demand.
MARGINS
The cumulative increase in margins to maintain positions on U.S. crude benchmark West Texas Intermediate since February is 67 percent, with the cost rising to $6,250 per contract from $3,750.
"Having high margin requirements makes it more difficult for speculative traders to enter the market, so naturally that will cause less speculative activity in oil markets," said Ben Westmore, commodity economist at National Australia Bank.
Margins are deposits paid by investors in futures markets, where full payment is made when contracts mature, to an exchange or clearing house to cover the risk of default and are based on the largest most-likely daily market move.
CME's move comes after a volatile week of oil trading that saw U.S. crude prices fall from over $114 a barrel -- the highest level since 2008 -- to $94 a barrel.
That drop was part of a wider commodities sell-off last week, spurred in part by steep margin increases of 84 percent in silver over the past two weeks.
The margin hike impact on oil prices may be less severe than in silver, which fell more than 30 percent from a record high in late April due to a succession of margin hikes that nearly doubled trading costs for the precious metal.
"It won't be as significant as the impact on the silver market because silver prices have just risen so strongly and based very little on fundamentals," Westmore said.
Volatility remained high with the Chicago Board Options Exchange's oil volatility index .OVX up 0.65, or 1.57 percent, at 42.09 on Tuesday. The index touched 48.64 last Thursday, the highest in nearly a year.
Oil markets are also under pressure from a downgrade of Greece's credit rating by Standard and Poor's. The cut further into the junk category reflects growing doubts that the euro zone's most fragile economy can manage its debt without imposing losses on private bondholders.
A troubled euro zone economy has bearish implications for dollar-denominated crude prices not only because any dollar gain against the euro makes crude costlier in Europe, but because Europe's economic woes may curb its oil demand.
Technical charts showed Brent was expected to retrace to $110.84 per barrel, as a rebound that started from the May 6 low of $105.15 has been completed, while U.S. oil faces a strong resistance at $102.88 and is expected to retrace to $99 per barrel, Reuters market analyst Wang Tao said.
SUPPORTING PRICES
Bearish sentiment was limited by rising concerns over U.S. gasoline supply ahead of the summer driving season.
A Reuters poll ahead of weekly industry and government reports forecast U.S. gasoline supplies had eased last week for the 12th consecutive time, falling 100,000 barrels, while crude stockpiles rose 1.3 million barrels.
U.S. gasoline futures rose 0.66 cents to $3.2855 a gallon, after jumping 6 percent on Monday.
Monday, July 25, 2011
What is the Difference between Forex and Futures?
Highly Trending Forex markets
Because the foreign exchange market does not close, it isn't dramatically impacted by buying programs and cannot be easily manipulated, the forex market offers some of the smoothest trends available in any market. No other market can come close to the amount of monetary volume and participation as the forex market making it a haven for traders not having to deal with gaps and price movements, erratic spikes and other choppy market conditions more commonly experienced in the futures markets.
No Commissions
Though some speculators are unaware, ALL financial markets have a spread (the difference between the bid and ask price). In the futures market you are not only paying the spread, but you are also paying commission charges, clearing and exchange fees on top of the spread. Ticker prices in the Futures market typically signify the last traded price, not the price at which you will be filled. In the Forex market, you are paying what's referred to as a PIP or PIP spread. In plain English, as best we can interpret, what you are paying is the difference between the bid and the ask price. The retail forex market is very loosely regulated, so the way a lot of brokerage firms make their money is to trade the accounts between other accounts within their firm. By doing this, you are eliminating an exchange that would add fees to your trades. You are still getting your bid or ask price, there just isn't someone running to the floor as it's all done internally.
Better Leverage
Trading in the spot currency markets provides advantages over trading currency futures contracts. One of the main advantages for traders trading spot currencies is the margin rate or leverage that clients are given. In spot currency trading customers receive one low margin rate for trades done 24 hours a day. In currency futures trading the client has one margin rate for "day" trades and one margin rate for "overnight" positions. This can become a hassle for traders and decreases the overall tradability of the currency futures markets. Margin rates in spot currency trading vary from around 1% to 5% depending on the size of transactions a particular trader initiates.
24-hour Trading
Since the forex market, in a sense, "follows the sun" around the globe the market rarely experiences periods of illiquidity. What this means is that any trader in any time zone can trade forex at any time during the day or night! You no longer have to wait for the market to open when news has already hit the streets or have to stop trading because the CME, CBOT or other American futures pits have closed for the day. This gives the forex trader added flexibility and continuous market opportunities that just aren't available in futures. To explain the global effect on the forex market, there are three main economic zones that are linked throughout the world. For instance, when the Pacific Rim markets such as Japan and Singapore begin to slow, the European markets of England, Switzerland and Germany begin, followed by the North American markets of the United States, Canada and Mexico. As the North American markets begin to slow down for the evening, the Pacific Rim starts their trading day. This example shows that you are no longer limited to trading the comparatively short trading day offered by US markets alone.
Because the foreign exchange market does not close, it isn't dramatically impacted by buying programs and cannot be easily manipulated, the forex market offers some of the smoothest trends available in any market. No other market can come close to the amount of monetary volume and participation as the forex market making it a haven for traders not having to deal with gaps and price movements, erratic spikes and other choppy market conditions more commonly experienced in the futures markets.
No Commissions
Though some speculators are unaware, ALL financial markets have a spread (the difference between the bid and ask price). In the futures market you are not only paying the spread, but you are also paying commission charges, clearing and exchange fees on top of the spread. Ticker prices in the Futures market typically signify the last traded price, not the price at which you will be filled. In the Forex market, you are paying what's referred to as a PIP or PIP spread. In plain English, as best we can interpret, what you are paying is the difference between the bid and the ask price. The retail forex market is very loosely regulated, so the way a lot of brokerage firms make their money is to trade the accounts between other accounts within their firm. By doing this, you are eliminating an exchange that would add fees to your trades. You are still getting your bid or ask price, there just isn't someone running to the floor as it's all done internally.
Better Leverage
Trading in the spot currency markets provides advantages over trading currency futures contracts. One of the main advantages for traders trading spot currencies is the margin rate or leverage that clients are given. In spot currency trading customers receive one low margin rate for trades done 24 hours a day. In currency futures trading the client has one margin rate for "day" trades and one margin rate for "overnight" positions. This can become a hassle for traders and decreases the overall tradability of the currency futures markets. Margin rates in spot currency trading vary from around 1% to 5% depending on the size of transactions a particular trader initiates.
24-hour Trading
Since the forex market, in a sense, "follows the sun" around the globe the market rarely experiences periods of illiquidity. What this means is that any trader in any time zone can trade forex at any time during the day or night! You no longer have to wait for the market to open when news has already hit the streets or have to stop trading because the CME, CBOT or other American futures pits have closed for the day. This gives the forex trader added flexibility and continuous market opportunities that just aren't available in futures. To explain the global effect on the forex market, there are three main economic zones that are linked throughout the world. For instance, when the Pacific Rim markets such as Japan and Singapore begin to slow, the European markets of England, Switzerland and Germany begin, followed by the North American markets of the United States, Canada and Mexico. As the North American markets begin to slow down for the evening, the Pacific Rim starts their trading day. This example shows that you are no longer limited to trading the comparatively short trading day offered by US markets alone.
What are Different Currency Pairs in Forex Trading?
Below are lists of the different pairs we've found are traded. Please note, not every brokerage firm offers all of the pairs, and we know that there are some that are missing from our list - but these give you an idea of what trades with what. If you click on the pairs, they will also take you to the Charting page for that pair. If you can't figure out what 3 letter code stands for what, check out our country code page.
MAJORS
EUR/USD | GBP/USD | USD/CHF | USD/JPY
OTHERS
USD/EUR | USD/GBP | JPY/USD | JPY/EUR | GBP/EUR | CHF/USD | JPY/GBP | JPY/CHF | CHF/EUR | CHF/GBP | USD/ZAR | USD/SGD | EUR/SEK
CROSSES
USD/CAD | AUD/USD | NZD/USD | USD/NOK | USD/DKK | USD/SEK | EUR/JPY | EUR/GBP | EUR/CHF | GBP/JPY | GBP/CHF | CHF/JPY | AUD/JPY
Other Arab Currencies
USD/EGP | USD/JOD | USD/QAR | USD/SAR | USD/TND | EUR/EGP | EUR/JOD | EUR/QAR | EUR/TND | EGP/USD | EGP/EUR | EGP/CHF | JOD/USD | JOD/EUR | JOD/JPY | JOD/GBP | JOD/CHF | QAR/EUR | QAR/USD | QAR/JPY | QAR/GBP | QAR/CHF | SAR/USD | SAR/EUR | SAR/JPY | SAR/GBP | GBP/SAR | SAR/CHF | TND/USD | TND/EUR | TND/JPY | TND/GBP | TND/CHF | EUR/SAR | EGP/JPY | EGP/GBP | GBP/JOD |
MAJORS
EUR/USD | GBP/USD | USD/CHF | USD/JPY
OTHERS
USD/EUR | USD/GBP | JPY/USD | JPY/EUR | GBP/EUR | CHF/USD | JPY/GBP | JPY/CHF | CHF/EUR | CHF/GBP | USD/ZAR | USD/SGD | EUR/SEK
CROSSES
USD/CAD | AUD/USD | NZD/USD | USD/NOK | USD/DKK | USD/SEK | EUR/JPY | EUR/GBP | EUR/CHF | GBP/JPY | GBP/CHF | CHF/JPY | AUD/JPY
Other Arab Currencies
USD/EGP | USD/JOD | USD/QAR | USD/SAR | USD/TND | EUR/EGP | EUR/JOD | EUR/QAR | EUR/TND | EGP/USD | EGP/EUR | EGP/CHF | JOD/USD | JOD/EUR | JOD/JPY | JOD/GBP | JOD/CHF | QAR/EUR | QAR/USD | QAR/JPY | QAR/GBP | QAR/CHF | SAR/USD | SAR/EUR | SAR/JPY | SAR/GBP | GBP/SAR | SAR/CHF | TND/USD | TND/EUR | TND/JPY | TND/GBP | TND/CHF | EUR/SAR | EGP/JPY | EGP/GBP | GBP/JOD |
What is a PIP in Forex Trading?
What is a PIP?
You will constantly see ads for "No Commission" trading - and then they promptly boast their low PIP spreads... But do you have any idea what a PIP actually is?
As Forex Trading there are no exchanges, a PIP is a fancy way of charging you an exchange fee, and saying that you don't have any commissions. Just know this - the Forex firms are not non-profit organizations, so one way or another, they are going to make their money. The best thing to know is that a PIP is their take of the money - and be aware of how they're calculated.
The below information explains how to calculate point price (PIP):
All currency pairs can be subdivided into three logical groups - pairs with direct quote (EURUSD, GBPUSD), pairs with inverse quote (USDJPY, USDCHF), and cross rates (GBPCHF, EURJPY etc.).
• The pip price for currency pairs with direct quote is calculated according to the following formula
[pip] = [lot size] × [tick size]
where [tick size] - is the smallest possible change in price, for example for USDCHF and EURUSD it's 0.0001. For currency pairs with direct quote the pip price is constant.
Example.
EURUSD. Lot size is 100,000, tick - 0.0001. [pip] = 100000 * 0.0001 = $10.00
• For currency pairs with inverse quote:
[pip] = [lot size] × [tick size] / [current quote]
For currency pairs with inverse quote the pip price varies depending on the current quote.
Example.
USDJPY. Lot size is 100,000, tick - 0.01. If current quote is 129.20, [pip] = 100000 * 0.01 / 129.20 = $7.74
• For cross rates:
[pip] = [lot size] × [tick size] × [base quote] / [current quote]
where [base quote] - the current base pair quote.
Example.
GBPCHF. The lot size is J62500; if the current quote is 2.3000 and the base GBPUSD quote is 1.4550, [pip] = 62500 * 0.0001 * 1.4550 / 2.3000 = $3.95.
You will constantly see ads for "No Commission" trading - and then they promptly boast their low PIP spreads... But do you have any idea what a PIP actually is?
As Forex Trading there are no exchanges, a PIP is a fancy way of charging you an exchange fee, and saying that you don't have any commissions. Just know this - the Forex firms are not non-profit organizations, so one way or another, they are going to make their money. The best thing to know is that a PIP is their take of the money - and be aware of how they're calculated.
The below information explains how to calculate point price (PIP):
All currency pairs can be subdivided into three logical groups - pairs with direct quote (EURUSD, GBPUSD), pairs with inverse quote (USDJPY, USDCHF), and cross rates (GBPCHF, EURJPY etc.).
• The pip price for currency pairs with direct quote is calculated according to the following formula
[pip] = [lot size] × [tick size]
where [tick size] - is the smallest possible change in price, for example for USDCHF and EURUSD it's 0.0001. For currency pairs with direct quote the pip price is constant.
Example.
EURUSD. Lot size is 100,000, tick - 0.0001. [pip] = 100000 * 0.0001 = $10.00
• For currency pairs with inverse quote:
[pip] = [lot size] × [tick size] / [current quote]
For currency pairs with inverse quote the pip price varies depending on the current quote.
Example.
USDJPY. Lot size is 100,000, tick - 0.01. If current quote is 129.20, [pip] = 100000 * 0.01 / 129.20 = $7.74
• For cross rates:
[pip] = [lot size] × [tick size] × [base quote] / [current quote]
where [base quote] - the current base pair quote.
Example.
GBPCHF. The lot size is J62500; if the current quote is 2.3000 and the base GBPUSD quote is 1.4550, [pip] = 62500 * 0.0001 * 1.4550 / 2.3000 = $3.95.
Introduction to Forex Trading
Forex trading is typically done through a broker or market maker. As a forex trader you can choose a currency pair that you expect to change in value and place a trade accordingly. For example, if you had purchased 1,000 Euros in January of 2011, it would have cost you around $1,200 USD. Throughout 2009 the Euro’s value vs. the U.S. Dollar’s value increased. At the end of the year 1,000 Euros was worth $1,300 U.S. Dollars. If you had chosen to end your trade at that point, you would have a $100 gain.
Forex trades can be placed through a broker or market maker. Orders can be placed with just a few clicks and the broker then passes the order along to a partner in the Interbank Market to fill your position. When you close your trade, the broker closes the position on the Interbank Market and credits your account with the loss or gain. This can all happen literally within a few seconds.
Forex trades can be placed through a broker or market maker. Orders can be placed with just a few clicks and the broker then passes the order along to a partner in the Interbank Market to fill your position. When you close your trade, the broker closes the position on the Interbank Market and credits your account with the loss or gain. This can all happen literally within a few seconds.
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