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Currencies are traded in pairs. The above-mentioned eight currencies can generate 28 different currency pairs that can be traded. However, not all of them are quoted by forex market makers. Depending on the liquidity of currencies, there are 18 currency pairs which are quoted by forex market makers.
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Trading a synthetic pair requires opening two separate positions. This increases the cost of the trade and the exposure to the account. Any interest rate differentials between the three countries involved could also have a negative impact on the profitability of the trade if it is carried overnight.
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One of the problems with creating synthetic currency pairs is that they tie up double the amount of margin as would be required if the exact pair was offered through the broker. This also means that the trader must pay the spread on both of the pairs used to create the synthetic pair. But this may
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As soon as trading has to take place for a non trading(non quoted) currency pairs or for pairs which do not have enough liquidity, an alternate route is taken to create the currency pair. The pair thus created is known as synthetic pair. A synthetic currency pair is created by trading two separate
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are traded actively. Also, the more liquid the currency, the more demand there is for that currency. For example, United States dollar is world's most actively traded currency due to the size and strength of the United States economy and global acceptance of
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Synthetic pairs are generally used by financial institutions that wish to put on large positions, but there is not enough liquidity in the market in order to do so. It is generally not a practical solution in the retail forex market.
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There are many official currencies worldwide but not all currencies are traded actively in the forex market. Currencies backed by economically and politically stable nations or unions such as
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is an artificial currency pair which generally is not available in market but one needs to trade across those pairs. One highly traded currency, usually
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not be of much relevance because if the pair was offered directly through the broker interface, it would most likely have a similar spread cost.
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pair can be traded by creating a synthetic currency pair from two separate currencies. In this scenario,
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Typically, trends and ranges are cleaner on currency crosses than they are on the major currency pairs.
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is taken as intermediary currency to create any desirable synthetic cross currency pair.
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Crosses create more opportunities for traders by giving them more currencies to trade.
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currency pairs in such a way as to effectively trade a third currency pair. Usually,
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Trading crosses allows you to take advantage of differences in interest rates.
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The eight most traded currencies (in no specific order) are: the U.S. dollar (
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A synthetic currency pair allows one to reduce the spread costs of trading.
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191:can be taken as intermediary currency. To trade
434:"How to Create Synthetic FOREX Currency Pairs"
199:pair, the trader would simultaneously buy the
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408:"A Summary of Currency Cross Pairs"
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332:"Synthetic Cross Currency Pair"
307:"Synthetic Cross Currency Pair"
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26:synthetic cross currency pair
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462:USD TO CAD Live Conversion
357:"Synthetic currency pairs"
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383:"Synthetic currency pair"
336:www.traderslaboratory.com
438:www.thefinancialwhiz.com
84:) and the Japanese yen (
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477:Foreign exchange market
311:www.forexdictionary.com
277:Foreign exchange market
22:synthetic currency pair
18:foreign exchange market
387:www.onestepremoved.com
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287:International finance
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30:United States dollar
215:) pair and buy the
412:www.forextips.com
179:For example, the
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92:These pairs are:
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227:and selling
211:and selling
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417:10 February
392:10 February
341:10 February
443:9 February
366:9 February
316:9 February
293:References
235:Advantages
254:Overheads
471:Category
271:See also
231:) pair.
223:(buying
207:(buying
165:AUD/NZD
157:AUD/JPY
149:CHF/JPY
141:GBP/JPY
133:GBP/CHF
125:AUD/CAD
117:EUR/GBP
109:EUR/CHF
101:EUR/JPY
36:Overview
432:Bryan.
162:EUR/AUD
154:EUR/CAD
146:USD/JPY
138:AUD/USD
130:NZD/USD
122:GBP/USD
114:USD/CHF
106:EUR/USD
98:USD/CAD
445:2015
419:2015
394:2015
368:2015
343:2015
318:2015
44:and
229:CAD
225:USD
221:CAD
217:USD
213:USD
209:AUD
205:USD
201:AUD
197:CAD
193:AUD
189:USD
185:CAD
181:AUD
174:USD
88:).
86:JPY
82:AUD
78:NZD
74:CHF
70:GBP
66:EUR
62:CAD
58:USD
51:USD
46:EUR
42:USD
24:or
16:In
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