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The way currency paired is not fair

  • Post #1
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  • First Post: Apr 23, 2007 10:23pm Apr 23, 2007 10:23pm
  •  Gwan
  • | Joined Feb 2007 | Status: Small is beautifull | 1,368 Posts
why currency is paired in that way ,, eg : usd /jpy, not jpy/usd.....

i see that it weighted the currency in diffrent manner.

if jpy is up nomater what, we won't lose more than 118.30 (today price)

eg the jpy is up 4 times of today price, we would only lost 3/4 of today price isn't it
but if the usd is up 4 times from today price, we would see 4 times more of the price.

but on the contrary, when jpy is weaken to 1/4 of today price, we can hope a 4x of the price in the chart isn't it?
  • Post #2
  • Quote
  • Apr 23, 2007 10:37pm Apr 23, 2007 10:37pm
  •  x2012
  • | Joined Mar 2007 | Status: Member | 31 Posts
Quoting Gwan
Disliked
why currency is paired in that way ,, eg : usd /jpy, not jpy/usd.....

i see that it weighted the currency in diffrent manner.

if jpy is up nomater what, we won't lose more than 118.30 (today price)

eg the jpy is up 4 times of today price, we would only lost 3/4 of today price isn't it
but if the usd is up 4 times from today price, we would see 4 times more of the price.

but on the contrary, when jpy is weaken to 1/4 of today price, we can hope a 4x of the price in the chart isn't it?
Ignored
i dont exactly understand what you mean, but from the gist of it, it sounds like you dont really know too much about the currency market.

If the pair was quoted the other way around, eg JPY/USD, then the price will simply be an inverse of what it is right now. everything else will stay the same.. of course, the chart will be flipped over to correspond to the inverted price
 
 
  • Post #3
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  • Apr 23, 2007 11:49pm Apr 23, 2007 11:49pm
  •  Gwan
  • | Joined Feb 2007 | Status: Small is beautifull | 1,368 Posts
imagine a pair of A - B currency
at first A=B so the price would be 1.00
then somehow A= 2B now the price 2.00
but if 2A = B ,it makes the price goes to 0.50

see that when the A currency goes up as 2 x B we can see 100 pip diffrence
but when B currency goes up 2 x A we only get 50 pip difference from original price.

Quoting x2012
Disliked
i dont exactly understand what you mean, but from the gist of it, it sounds like you dont really know too much about the currency market.

If the pair was quoted the other way around, eg JPY/USD, then the price will simply be an inverse of what it is right now. everything else will stay the same.. of course, the chart will be flipped over to correspond to the inverted price
Ignored
 
 
  • Post #4
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  • Apr 23, 2007 11:59pm Apr 23, 2007 11:59pm
  •  WHTenn
  • Joined Nov 2006 | Status: Member | 1,758 Posts

The Base Pair is the pair listed on the left side

Expressing a relational value between two currencies is done by combining two currency abbreviations in the fashion of XXX/YYY. This indicates the amount of YYY currency (the "quote" currency) equivalent to one unit of XXX ("base" currency). For example if the exchange rate for USD/JPY - the US Dollar to Japanese Yen rate - was 100 it would mean that each USD is worth 100 JPY.

Using this convention, changes up or down in the quoted exchange rate indicate changes up or down in the value of the base currency. Using the USD/JPY example again, if the rate went from 100 to 101 it would mean a 1% increase in the value of the USD against the JPY. Similarly, a decline from 100 to 99 would represent a 1% fall in the USD value vs. the JPY.
In theory, one could quote the exchange rates either way around - meaning if USD/JPY is 100 it is the same as saying JPY/USD is 0.01 (one JPY is worth $0.01). In practice, however, the forex market has specific conventions for the traded pairs. In most cases, USD is the base currency, with the other currency in question being the quote currency. USD/JPY is an example.
There are a few exceptions, though. When it was introduced in 1999, the market authorities decided the Euro would always be the base currency in all traded pairs. Before that, the Pound (GBP) held that distinction. Thus, when traded against either of those, the USD is the quote currency (EUR/USD, GBP/USD). The same also holds for former British Commonwealth currencies the Australian Dollar (AUD/USD) and the New Zealand Dollar (NZD/USD).
It is worth noting that forex futures contracts involving currencies as quoted against the US Dollar do not hold to the spot market convention. Instead they all use the USD as the quote currency.

Hope that this helps with your first question.

Good Luck

 
 
  • Post #5
  • Quote
  • Apr 24, 2007 9:02am Apr 24, 2007 9:02am
  •  Bemac
  • Joined Jan 2006 | Status: Monarch o' the Glen | 5,561 Posts
Quoting Gwan
Disliked
imagine a pair of A - B currency
at first A=B so the price would be 1.00
then somehow A= 2B now the price 2.00
but if 2A = B ,it makes the price goes to 0.50

see that when the A currency goes up as 2 x B we can see 100 pip diffrence
but when B currency goes up 2 x A we only get 50 pip difference from original price.
Ignored
Actually I found it interesting that when I moved to Spot FX from Futures that I now had to revamp my mental Rack Rate for various currencies.

Attached is a 1Hr June Yen Futures Chart. Note the price scale is Inverse.
Attached Image (click to enlarge)
Click to Enlarge

Name: June 07 Yen.PNG
Size: 14 KB
 
 
  • Post #6
  • Quote
  • Edited 11:19am Apr 24, 2007 9:56am | Edited 11:19am
  •  melpheos
  • Joined Jan 2007 | Status: Stochastic pipster | 1,657 Posts
Quoting Gwan
Disliked
imagine a pair of A - B currency
at first A=B so the price would be 1.00
then somehow A= 2B now the price 2.00
but if 2A = B ,it makes the price goes to 0.50

see that when the A currency goes up as 2 x B we can see 100 pip diffrence
but when B currency goes up 2 x A we only get 50 pip difference from original price.
Ignored
And tell me what happen if you reverse the pair ?

B=A so the price would be 1.00
then somehow B=2A now the price 2.00
but if 2B=A, it makes the price goes to 0.50....

You really need to study more math basics, dont you ?
 
 
  • Post #7
  • Quote
  • Last Post: Apr 24, 2007 11:54am Apr 24, 2007 11:54am
  •  WHTenn
  • Joined Nov 2006 | Status: Member | 1,758 Posts
Quoting melpheos
Disliked
And tell me what happen if you reverse the pair ?

B=A so the price would be 1.00
then somehow B=2A now the price 2.00
but if 2B=A, it makes the price goes to 0.50....

You really need to study more math basics, dont you ?
Ignored
Currency pairs have been reversed before. Don't actually know what happens though.
 
 
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