The forex baskets give traders a broader portfolio that has less risk. They also reduce the cost of trading and therefore saving money for the customers that would otherwise be lost to trading costs.
FXCM, online foreign currency exchange and CDF trading provider, has announced the addition of three forex baskets to its offerings. The announcement by the trading platform was made on Thursday. Speaking on the new additions by the exchange, Chief Executive Officer of FXCM, Brendan Callan said that the customers on the exchange usually trade in multiple currencies at the same time as a way of broadening their portfolios, diversifying their risk or hedge an existing position.
He added that the baskets would give customers an efficient way of trading multiple currencies while reducing the risk of exposure or adverse movements in a single currency. The baskets also reduce the cost of trading on the exchange.
A forex basket is a group of mixed currencies and they start off with the same equivalent value. Traders can then buy or sell a base currency against a pick of multiple currencies that are available in that particular basket. The value of a basket is then derived from how the base currency performs against the other currencies that are in the same basket from the time the basket was created.
The Three Baskets Offered By FXCM
To begin with, FXCM is offering its clients three baskets although it is unclear whether they will offer more baskets over time. The three baskets currently on offer are The Dollar Index Basket, The Yen Index Basket and The Emerging Markets Index Basket. Retail clients of the exchange from across the globe will be able to access the baskets.
The Dollar Index Basket has the US Dollar (USD) as the base currency. The USD, in this basket, is then traded against the British Pound (GBP), the Euro (EUR), the Japanese Yen (JPY) and the Australian dollar (AUD).
The Yen Index Basket used the Japanese Yen as it’s the base currency. The Yen is traded against the Canadian dollar (CAD), EUR, AUD and GBP in this basket.
The Emerging Markets Index Basket also makes use of the USD as it’s a base currency. The USD traded against the Mexican Peso (MXN), the Chinese Renminbi (CNY), the South African Rand (ZAR) and the Turkish Lira (TRY).
The additions made by FXCM are sure to give their customers a more diverse range of trading choices. They also add convenience to the trading platform and this will attract more customers to the forex exchange.