Trading Manual Part 9: Major, Minor & Exotic currency pairs
Major, Minor & Exotic currency pairs
In the area of currency trading, all the different currency pairs are placed in 3 categories'. We
Call these: Major, Minor and Exotic's. Beneath, you can ﬁnd these 3 together with their
Associated currency pairs (assets).
The Significant currency pairs all include the US Dollar on one side -- Either about the base
Side or estimate side. They're the most frequently traded pairs from the Forex market.
The arches normally have the cheapest spread and are the most liquid. The EUR/USD is
The most traded pair with a daily volume of nearly 30% of the full market.
- EUR/USD - USD/CHF - USD/JPY - AUD/USD - GBP/USD -- NZD/USD - USD/CAD
Currency pairs that don't contain the US Dollar are known as minors. Historically, if
We wanted to convert a currency, we'd need to convert the currency into US
Dollars first, then to the currency we wanted.
With the introduction of currency crosses we no more need to do this dull
Calculation as most of agents currently offer the direct trade rates. The most active crosses
Are derived from the 3 leading Non US Dollar currencies. (the Euro, GB Pound and
These currency pairs are also referred to as the minors.
EUR/GBP EUR/AUD EUR/JPY GBP/JPY-CHFAPY -CADHPY -NZDHPY -GBP/CAD
Exotic currency pairs Comprise of a major currency paired together with the currency of an
Emerging or a robust but smaller economy from an international perspective like Hong
Kong or Singapore and European nations Outside the Euro Zone.
These pairs are not traded as frequently since the majors or minors, so often the price of
Trading these pairs can be greater compared to majors or minors as a result of deficiency of
liquidity in these markets.
-- EUR/TRY - USD/ZAR - USD/SEK - USD/HKD - USD/NOK -- USD/SGD - USD/DKK
In Forex, traders utilize leverage to profit in the changes in exchange rates
Between two unique currencies. The leverage That's achievable from the Forex and CFD market
Is one of the greatest that traders can obtain. Leverage is a loan that is supplied to
An investor by the broker who is handling their Forex account. Once an investor
Decides to invest in the Forex or CFD market, they must first open a margin account
Using a broker. Usually the amount of leverage That's provided is either 50:1, 100:1
Or 200:1, depending upon the broker and the size ofthe place the investor is trading.
A Typical lot size in trading has been completed on 100,000 units of currency, so for a trade of
This size, the leverage provided is generally 50:1 or 100:1. Leverage of 200:1 is usually
Used for positions of 50,000 units or less.
To trade $100,000 of currency, with a margin of 1 percent, an investor will only have to
Deposit $1000 into his account. The leverage provided on a trade like this is 100:1.
Leverage of the size is considerably larger than the 2:1 leverage typically supplied
On stocks and stocks.
Though 100:1 may seem extremely risky, the risk is less when you
Believe that currency prices generally change by less than 1% throughout swing trading. If
Currencies fluctuated as much as equities, brokers would be unable to provide as
Although the ability to make significant profits using leverage is substantial, leverage
May also work against investors. For example, if the currency underlying one of your
Trades moves in the opposite direction of what your analyses told you, leverage will
greatly amplify the potential losses. To prevent such a catastrophe, we utilize a strict risk
and money management.
Margin is the amount of money that you want to open a position in your Forex account.
It's basically an amount that's set aside for each new trade you start. For Instance,
Whenever you have a $1000 margin balance and you need a 1 percent margin minimum to open
A place, you can command a position of $100,000. This makes it possible to get a trader
To leverage their account 100:1.
How higher the leverage selected, the higher the available margin percentage will be!
When you use to large lot sizes or open to many places, it could happen that your
Account falls under the minimum amount which is required to keep a position open.
When this occurs you get a "margin call". When this occurs, You'll Need to
Deposit more money in your trading account, or you'll have to close positions.
When your margin percentage falls under the 50 percent, the agent mostly reduce your trades
Automatically what will literally make you cry. This Is the Reason Why we trade safe and adhere to
Our risk management plan.
This is also the reason why you Want to be very careful with the amount of positions
You open, when a top leverage is selected. By Way of Example, when you opened your
Trading account on a 400:1 leverage, two standard lot sizes would be to much as you
Possess a S2000 account. 2 normal lot sizes will provide you with a pip value of somewhere
Approximately $20. When you take the margin in account, you would have around
$1300 left on your trading accounts, this could make it possible to get your account
Wiped out in roughly 65 pips. To prevent all this, we use a lot size calculator...!
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