By Darrell Martin
When you walk into just about any retail outlet in America, whether it is a big box department store or an automobile dealership, if you don’t see exactly what you want, you can either go somewhere else or place a special order for what you do want.
If you want your walls a designer color to match a specific item, you can customize your paint. If you want certain things that don’t come standard on your new car, you can customize to achieve the car of your dreams.
When there’s a news report coming out and you want to place a news trade, there are many Forex pairs that “come standard.” Sometimes, though, you want more. Those standard pairs are just not quite right.
They don’t measure up to what you want to trade. They might not be the right fit or hit the right highs and lows of the trades you want to place. You might believe that this news release is going to effect a different combination than the regularly traded pairs. That’s where the Exotic Currencies come into your trading repertory.
Nadex offers eight different Bull Spread pairs that under most circumstances meet your trading needs. However, there are times, and you must be advanced in your trading to even consider this, when you need the Exotic Currencies.
There are actually 15 Exotic Currencies available worldwide. You may have an exotic car and choose to use a synthetic blend oil in it. It runs smoother that way. In trading, there is a way to make a synthetic pair to make these exotic currencies.
In this five-part series, it will be demonstrated how you can use the more commonly traded pairs to make synthetic pairs in order to meet your trading needs.
As you can see in the image above, there are many possibilities. Let’s look at an example and see how to put together a simple synthetic pair. The next four articles will demonstrate how to use the synthetic pairs to place four different types of trades:
Synthetic Long Synthetic Short Synthetic Straddle Synthetic Condor
How do you put together a synthetic pair? For example, let’s say you wanted to trade the EUR/CAD, because it is one of the most volatile pairs. Remember when you wondered if you would ever use all that algebra you studied so hard? Now is the time to put it to use. It’s the simple algebraic formula of:
Let’s plug in the instruments in order to create the synthetic pair.
In using the algebraic formula from your high school days, the USD (b) is crossed out, leaving EUR for (a) and CAD for © and there you have EUR/CAD.
Now that you know how to make your own synthetic pair, look for the next four articles to learn how to use these exotics in your trading.
For other trading technics, go to www.apexinvesting.com. Apex Investing Institute offers free education, and free access to the Nadex Binary and Spread Scanner Analyzers. Member traders are invited to trade in the chat rooms, take advantage of trade signal services, have key indicators and access the Apex Forum. The forum content is updated daily and includes over 8000 members. In a supportive learning community of seasoned as well as up and coming traders, traders of all levels learn how to trade Nadex binaries and spreads in depth, as well as futures, forex, stock and options, and gain an edge for successful trading overall.