How to Read Currency Pairs: Forex Quotes Explained
To avoid repetition, we only highlight FX specific features in the FX section. The coverage of these conventions will take us a bit beyond the Black Scholes assumptions of constant volatility , which might create a little bit of inconsistency against our coverage of stock options, as we have not explicitly covered the equivalent conventions, smile conventions, for stocks. Before we delve into the details, we list the relevant articles and books for references and further reading:.
Before we delve into the details, we list the relevant articles and books for references and further reading: Castagna, A. FX options and smile risk. Chichester: John Wiley and Sons.
Castagna, A. A cross-currency is any currency pair in which neither currency is the U. These pairs exhibit erratic price behavior since the trader has, in effect, initiated two USD trades. Cross-currency pairs frequently carry a higher transaction cost.
Forex Trading: Reading FX Quotes
When you open a new margin account with a forex broker, you must deposit a minimum amount with that broker. Each time you execute a new trade, a certain percentage of the account balance in the margin account will be set aside as the initial margin requirement for the new trade.
The amount is based upon the underlying currency pair, its current price, and the number of units or lots traded. The lot size always refers to the base currency.
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Mini accounts trade mini lots. It is the ability to control large dollar amounts of a financial instrument with a relatively small amount of capital. You cannot do a kindness too soon, for you never know how soon it will be too late Emerson Ralph Waldo.
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Skip to primary navigation Skip to main content Skip to primary sidebar Skip to footer. This lesson is part 5 of 11 in the course The Foreign Exchange Market.