Tag Archive Parity

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What is a Parity? How is a Parity Calculated?


What is a Parity? How is a Parity Calculated?

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In its simplest terms, the parity refers to the ratio of country currencies. The interest rates of the country currencies and the economic conditions they are in can be counted as factors affecting the parities. For example, in terms of Turkey’s foreign trade balance, EURUSD (Euro Dollar parity) is a big part because of the fact that most of the exports are in Euros and most of the imports are in US dollars.

 

HOW CAN THE PARITY BE CALCULATED?

Euro: 3 TL Dollars: 2 TL and Euro Dollars 3/2 = 1.5. In this case, the Dollar will be 2/3 = 0.66.

 

An investor who bought EURUSD (long position) will have sold USD in exchange for the EUR bought; sale (Short Position) will make it sell Euro and receive US Dollars.

 

EURUSD parity (Euro / US Dollar), USDJPY (American Dollar / Yen), GBPUSD parity (Sterling / US Dollar) and AUDUSD (Australian Dollar / US Dollar) are among the top paratels that are traded on Forex markets. In addition to these, the USDTRY parity (US Dollar / Turkish Lira) and EURTRY (Euro / Turkish Lira) are also included in Turkey.



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What is Forex Spread?

What is Forex Spread?

 

capital forex, forex, invest, investment, trade, traders, money, monetary, foreign, excahnge, buying, seller, forestfx, spread, forex spread, SPREAD TRANSITIONALThe difference between the purchase price (ask) and the selling price (bid) of currency pairs / parities (the ratio of currencies) is called spread. The difference between buy-sell prices is measured in pips. Pip is the change on a piece of paper, and most parts represent the 4th step change (1 pip = 0,0001).

 

There may be differences between the brokerage houses offering brokerage services in Forex markets and products from the market. Spreadler may show intraday variability depending on the liquidity in the market. These spreads, which are called dynamic spreads (spreads), may narrow at times when liquidity is high and may expand at times when liquidity is low. Some brokerage houses also have a fixed spread application. Brokerage houses usually do not get commission on Forex market transactions, and the income they earn is within these spread rates.

 

WHY SPREAD RATE? How is SPREAD TRANSITIONAL?

Forex spread ratios are not fixed because they are based on prices given by large banks and may decrease or increase according to market conditions.

 

capital forex, forex, invest, investment, trade, traders, money, monetary, foreign, excahnge, buying, seller, forestfx, spread, forex spread, SPREAD TRANSITIONALFor example; In the EURUSD parity, the selling price is 1,1356 and the selling price is 1,1354, the spread will be 2 pips. Assume that you open a position in the buying direction at a price of 1,1356 in the EURUSD size of 1 lot (position size 100,000 EURO = 113,560 USD). When you open the position, the selling price will be 1,1354 due to the 2 pip spread in between and will appear as * 100,000 = -20 USD in the profit / loss column (1,1354-1,1356). That is, the position will start to run out of proportion to the spread rate. When the selling price rises to 1,1356, your position will be at the beginning and the profit / loss situation will be 0 (zero).

 

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Forex FOREIGN TRADE

Forex FOREIGN TRADE

 

A parity is a pair of currencies in which a country’s currency is valued against the currency of the other country. According to their prevalence in global markets, major and minor (exotic) parities are examined in two groups.

A parity is a pair of currencies in which a country’s currency is valued against the currency of the other country. According to their prevalence in global markets, major and minor (exotic) parities are examined in two groups. The parallels traded most in global markets are called major. Another reason for the major denomination of these currencies is that country economies are robust and dynamic.

There are 7 major currencies that are traded on financial markets. These are Euro, US Dollar, Japanese Yen, British Sterling, Swiss Franc, Canadian Dollar, Australian Dollar. Minor currencies are currencies with lower transaction volumes, preferred by local investors.

The most preferred minor currencies are New Zealand Dollar, South African Randi, Singapore Dollar. Parity pairs consisting of one major currency and one minor currency are also called minor parity.

On the Forex market, every transaction on the parity occurs when a foreign currency is sold and other foreign currency is bought. According to this price, it is necessary to understand how much the counter currency should be paid to get one from the first currency. If the EURUSD is priced at 1.1090, EUR1.1090 will have to be paid to get 1 EURO. In the Forex market, investors aim to earn from price fluctuations of currency pairs by buying or selling other currencies in exchange for a foreign currency. The expectation of investors who want to buy the euro and make a profit increases the value of parity, but this situation is shaped by the multiplicity of supply and demand.

How is the parity calculated? We will clarify this question with the help of a sample;

EURTRY: 3,2440
USDTRY: 2,9220
EURUSD is calculated as: 3,2440 / 2,9220 = 1,1101.

There are many factors that affect the price of the parity. These are economic data, decisions of the Central Bank, political developments and geopolitical risks, which have a significant effect on the price of the currency. The increase in interest rates ensures that the growth figures announced on the anticipation or the value of the industrial currency are appreciated; Low employment, rising foreign trade deficits in emerging countries, or rising inflation lead to the devaluation of the money. The uncertainties in the political structure of the country and the loss of political confidence will cause the currency to lose value.

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What products are traded in Forex?

What products are traded in Forex?

Forex market can be traded in many currencies from currencies to commodities and indices, and products are divided into categories such as parity, commodity and CFD. It will be useful to recognize the products before proceeding.

Parity:
A country is the ratio of one currency to another,
For example, USDEURO means US Dollar / EURO, which is how much EURO 1 dollar is made.

 

Commodity:
Goods and products that are subject to commercialization, ie products such as gold, oil, silver, copper, platinum and coffee, wheat, corn, cocoa and cotton which have a spontaneous value and which are subject to commercial activities such as mining, energy and food.

 

CFD:
The original opening is Contract for Difference, which means the difference contract.

The characteristic of CFDs is that they are futures.

For example, you may prefer  CFDs if you want to

trade in a certain spot  rather than  instantaneous processing in  petroleum. The  difference in price

during the CFD transactions for which opening and closing dates are known will be your profit or loss.

 

You can easily process all of the products we have specified via Meta Trader. You can easily buy / sell and track prices on products that are grouped as titles and sub-options on the platform.