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

31 July, 2018

How to Trade Bitcoin Gold

Bitcoin Gold (BTG) is the second fork from Bitcoin (i.e. the second version to stem from Bitcoin’s source code) after Bitcoin Cash. The Bitcoin Gold fork occurred on 24th of October 2017, at block height 491,407...

23 July, 2018

XM gets award for outstanding services

We are proud to announce that in June 2018 XM received two more prestigious achievement awards as acknowledgement for the excellence we represent in the forex industry...

16 July, 2018

Investing in CFD Crypto Currency

FIBO Group company continues to enlarge the investment possibilities by increasing the number of trading instruments and trading accounts they are available on. We are glad to announce that from...

10 July, 2018

Exness now accepts global customers

Having recently expanded our global reach and established a UK-based entity, Exness (UK) Ltd, authorized and regulated by the UK’s Financial Conduct Authority (FCA), we are pleased...

3 July, 2018

easyTrade - new innovative trading

easyMarkets has officially launched its latest trading innovation - easyTrade. Based on diverse vanilla options, this new product allows easyMarkets clients to trade without margin requirements...

29 June, 2018

How to Trade Bitcoin CFDs in 4 Easy Steps

Bitcoin is the world’s first digital currency and it is expanding in popularity worldwide. Now, traders can trade Bitcoin with AvaTrade as the ideal asset in CFD trades. With our platform - MetaTrader 4...