Im in a bit of an unusual dilema. I need to calculate the rate of and place a trade for several pairs which are not available at all on any forex trading platform I have come across. For example I need to calculate the rate of the usd/eur, usd/gbp and gbp/eur. The “inverse” of the pairs are available on all platforms i.e. the eur/usd, gbp/usd and eur/gbp.
So for example if I want to convert usd to pounds and I dont have access to the usd/gbp rate so I cant go short on that, then would it be equivalent to say that I can go long on the gbp/usd pair. So basically would it be the same thing? Furthermore, If I want to calculate the rate of the usd/gbp pair, would it be equivalent to 1/(gbp/usd buying rate) i.e. taking a mathematical inverse of the gbpusd buying rate??? Lastly, If i want to convert from usd to gbp, then would it be correct if I used the math inverse technique mentioned above to calculate the rate and then open a buy position on the gbp/usd? Or is this whole method fundamentally wrong? If so what would be another way to calculate the usd/eur, usd/gbp and gbp/eur and place appropriate trades?
Sorry for the trouble, as I am a complete newbie to forex and any help would be greatly appreciated.
As far as I know pairs are only displayed one way. So there is no inverse you just trade the opposite direction.
I am going to make the assumtion that your account is in $US which may be causing some confusion. You don’t need to convert your account equity to the other currency as such. When you short a currency other than that which you have in your account it is automaticly converted to the currency you want to short. It is as though your account equity is available in all currencies(at the relative exchange rate). The idea of selling something you don’t have can be confusing.
I’m not sure I understand exactly what you’re trying to do but you can go to XE - Universal Currency Converter and easily do any coversions you may need.
Hi,
Im aware of XE, but I was looking for a solution on a real time trading platform, like dbfx or fxcm etc.
Anyway, Ill try to make my question more clear. Since the pair on the trading platform is listed as EUR/USD, and what I needed was a USD/EUR pair to take my USD and convert them to EUR i.e. go short on USD/EUR pair, then would it be equivalent to say that I can substitute for the lack of the USD/EUR by going long on the EUR/USD pair?
The other question was for example on XE.com the USD/EUR rate is the mathematical inverse of the EUR/USD rate i.e. 1/x. So if I want the selling rate for the usd/eur, would it be equivalent to take the inverse of the EUR/USD buying rate?
What you said is correct. If you want to go short on USD/EUR is the same as long EUR/USD. However I am fairly sure that you wont find anyone who quotes the pair as USD/EUR. The pairs are only quoted in one way.
I think you are putting to much emphasis on what your account is held in. All the conversions are done automatically by your broker. The important part is which way you think the pair will move. So for the eur/usd pair you think that the usd is going to be weaker against the eur (therefore you think that the eur will be stronger), that means you should go long on the eur/usd pair.
You’re not going to find broker/dealer platforms (at least retail) which quote those inverse pairs. As you’ve noted, though, if you do 1/x you’ll get the price you’re looking for.