What is Currency Pair trade?

 

When you place a trade on a currency pair, you’re essentially buying one currency and selling another – but in a single transaction. So for example, going long or ‘buying’ EUR/USD means you’re buying the Euro and selling the US dollar. Going short means that you’re ‘selling’ the Euro and buying the US dollar.

 

Currency values rise (appreciate) and fall (depreciate) against each other due to a number of economic, geopolitical and technical factors and the forex market is the most traded in the world, with an average turnover in excess of $5 trillion a day.

A currency pair trade refers to the buying or selling of one currency in relation to another currency. For example, buying the US dollar would be a currency pair trade. The value of the currency pair is determined by the relative value of the two currencies being traded. Currency pair tradexn are commonly used in the foreign exchange market (forex) to speculate on changes in currency exchange rates.

Swap points

Swap points, also known as rollover or overnight rates, are the interest rate differential between two currencies in a currency pair trade. When a trader holds a position in a trade xn  currency pair overnight, they will either earn or pay the difference in interest rates between the two currencies. This difference is expressed in swap points.

For example, if the Trade xn interest rate on the US dollar (USD) is 2% and the interest rate on the Euro (EUR) is 0.5%, the swap point for holding a long position in the EUR/USD currency pair overnight would be -1.5. This means that the trader would pay 1.5% (the difference in interest rates) to hold the position overnight.

Swap points are determined by the overnight interbank interest rate of each currency and are typically expressed in points, but can also be expressed in pips (the fourth decimal place of a currency pair).

The swap points are important for the traders to consider trade xn as they may have a significant impact on the trader's profit or loss, specially for long term position.

Point trade

The swap point rates may help tradexn to manually calculate the swap points that may affect open positions and this can be done by the following calculation: Swap point rate x Pip value.

A point trade refers to a type of trade in which the unit of measurement is in "points" or "pips", instead of the currency's actual value. For example, in the foreign exchange market (forex), a point is the smallest increment of a currency pair's exchange rate. Points and Pips are used to express the change in value of a currency pair, and are used to calculate profits and losses in forex trading.

 

A point trade is typically used in the context of currency trading, as it is the most common market in which point measurements are used. For example, a trader may enter a position to buy the EUR/USD currency pair at 1.2000 and exit the position at 1.2050, for a 50 point gain. In this example, the gain is calculated by subtracting the entry price (1.2000) from the exit price (1.2050) and multiplying it by the position size (in this case, 1 lot = $100,000) .

 

 

 

 

 

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