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account currency / trade currency pair

Discussion in 'Beginners Bootcamp' started by vjeko, Feb 23, 2010.

  1. vjeko

    vjeko Recruit

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    I'm playing with demo standard and micro accounts
    and am unclear on the following -could someone enlighten me :) ?

    Does it make any difference which currency your account
    is in when you trade eg you may have account in USD
    but trade EUR/CHF - are there any conversions/costs how does this work
    (I guess I don't have a clue how this works) ?
     
  2. cowmadagan

    cowmadagan Sergeant

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    The costs of trading a pair that doesn't include the base currency of your account don't have any relationship to your base currency.
    All that matters is the country that your account is held in, as the countries that trade with it will have more competitive spreads than ones with less trade.
    For example, a US account, regardless of its base currency, will likely have a poor GBP/JPY spread than a UK or Japanese account.
    Correction: I forgot to mention the pip value will vary. You should stay abreast of pip values for any pair that you trade, as losing 30 pips on a EUR/GBP is likely to cost about twice as much as a EUR/USD 30 pip loss if you use USD as your base currency.
     
    #2 cowmadagan, Feb 23, 2010
    Last edited: Feb 23, 2010
  3. vjeko

    vjeko Recruit

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    can you be a bit more specific - what I don't understand is what happens eg if say I have an account in UK in EUR and I buy CHF/USD -what transactions have actually occured / what has happened to the EUR on my account in order to buy the CHF/USD ?

    BTW -thanks for the info re pip value !!- although I'd like to open even a micro account, I think there is so much to learn - it'll probably take me a few months
    just to have a good enough clue to try anything with real money.
     

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