Trading synthetic currency pairs

5 April, 2018

Trading synthetic currency pairs

A synthetic cross currency pair refers to an artificial combination of currencies usually not available in the market. If you are taking your first steps in the Forex market, then you are probably not going to invest huge money on it. And that is just fine, but keep in mind that starting out with a small balance could also limit your access to a wide range of trading instrument.

Nothing to worry about. Nowadays, Forex brokers offer a wide range of trading instruments, even for basic accounts. Newbies should try different pairs and find their prefered ones to work with.

The popularity of synthetic currency pairs is going down day by day. As brokers fight to survive in a competitive environment, their offers become more expansive. Not only EURUSD, GBPUSD and USDJPY are seen on screens, but also currency crosses like EURJPY or EURCAD.

Most traded currencies: US dollar (USD), Canadian dollar (CAD), euro (EUR), British pound (GBP), Swiss franc (CHF), New Zealand dollar (NZD), Australian dollar (AUD) and Japanese yen (JPY).


DO you think these are enough? Well, for most of us they are, but still there cases where traders need artificial combinations that a broker will not include in its preset offering.

A synthetic currency pair should actually be seen as two currency pairs, with the US dollar taking the role of intermediary currency in operations.

Example: you want to trade EURJPY and the pair is not offered by your broker as a cross currency pair. What do you do? You have to find a common connection between both. Right, the dollar.

Operating a synthetic currency pair requires you to open two separate positions, which means doble cost for you plus the need to lock up unnecessary capital for margin requirements.


Related materials

5 December, 2018

New trading terminal: MetaTrader 5

A popular trading platform MetaTrader 5, the next generation of MetaTrader 4 terminal, is now available for the clients of Grand Capital. As its predecessor, the new version offers a user-friendly interface...

23 November, 2018

Finances and trading up close

Since 2011, we’ve collected a lot of knowledge about financial markets, money management, long-term and short-term investments, trading psychology, and other fields related to trading and saving...

6 November, 2018

IronFX introduces IronX

IronFX is delighted to announce the launch of IronX public sale. The IronX ICO, which starts on November 1st, comes just a few weeks after the successful completion of a private sale of the IRX token...

24 October, 2018

XM Attended Cairo Investment Expo

On 22-23 October, XM participated at one of the most reputable financial exhibitions in the Middle East and North Africa, the Cairo Investment Expo, which took place in the Egyptian capital, Cairo...

16 October, 2018

$25 Welcome Bonus from Grand Capital

Today, Grand Capital is an international company with offices operating all over the world. Over 300,000 clients, multi-language support (9 languages), modern services, favorable trading conditions...

10 October, 2018

XM Awarded for Best Customer Service

We are proud to announce that the readers of Shares Magazine have voted XM as the broker with the Best Customer Service this year. The official ceremony of Shares Magazine’s widely recognized 2018 UK Forex Awards...