WHAT IS CURRENCY PAIR TRADING ?
Currency Pair Trading is the simultaneous buying and selling of the world’s international currencies on a centralized global market. On an outright commodity exchange, this trading is done via Composite Order Trading System (COTS). Using this functionality, a trader may take two positions simultaneously in Gold milli ounce futures contracts with a single click. In other words, if a trader wants to take simultaneously long position in the USD Gold and short position in the EUR Gold, he will place a single order through COTS.
The long gold in the first trade and the short gold in the second trade will ‘cancel’ each other, leaving the trader with an open EUR-USD position only. It is regulate, standardized and therefore exchange traded. It’s also referr to as the foreign exchange or FX market. As one of the largest and most liquid financial markets in the world, its total average turnover per day is report to exceed $5 trillion
HOW DO YOU TRADE IN CURRENCY PAIRS?
Our forex pairs are available to trade. When trading forex, you speculate whether the price of one currency will rise or fall against another.
For example, if you choose to trade GBP/USD (British pound/US dollar) and you think the value of the GBP will rise against USD, you go long (buy). If you think GBP will fall against USD, you go short (sell). Your prediction is correct, you make a profit. If your prediction is incorrect, you would make a loss. Remember, losses can exceed deposits.
CURRENCY PAIRS
Forex is always trade in currency pairs, for example EUR/USD. The first currency (EUR) is called the ‘base currency’. The second currency (USD) is the ‘counter currency’. How currencies are displaying shows us how many units of the counter currency you can buy with one unit of the base currency. This is the exchange rate, or in other words, how many US dollars you can buy for one euro.
Currency pairs can generally divided into three groups: major, minor and emerging.
Direct
Currency pairs that contain the US dollar as counter or quote currency and not as a base currency are known as direct currency pairs. Examples include EUR/USD, GBP/USD, AUDUSD.
Indirect
Currency pairs which contain the US dollar as a base currency and not as a quote currency are known as indirect currency pairs. Examples include USD/CHF, USD/JPY, USD/CAD.
Crosses
Currency pairs which do not contain the US dollar are known as cross currency pairs. Examples include EUR/GBP, EUR/CHF, GBP/JPY and CHF/JPY
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