You can trade USD/HKD currency pairs in the forex market, which is open 24 hours a day, five days a week. If you are trading with Seven Capitals, we provide round the clock support to all our customers as it is vital when it comes to the 24-hour open forex market.
If you buy a pair of USD/HKD for 7.75 Hong Kong dollars, and wait for the price to increase to 7.85 Hong Kong dollars, you can make a profit of 0.10 Hong Kong dollars from each pair. If you happen to buy and sell 1000 pairs, your profits will shoot up to 1 Hong Kong dollar, which is roughly 0.13 US dollars. But, in forex trading, brokers such as Seven Capitals provide high leverage options too.
So, if you are using leverage, say 1:100 for example, you could buy 100,000 pairs with the same amount of capital you used to buy 1000 pairs. Now, your original profit of 0.13 US dollars will shoot up to 100 times, which is 13 US dollars. But, remember that leverage should be used responsibly as it could magnify your losses too.
It will help if you learn how to read the price of currency pairs properly until the last decimal point. For example, the USD/HKD could be represented as 7.8200. This could be divided into two parts: the first four digits represent the Hong Kong dollar units as a whole (7.820), and the last digit (0) denotes the fractional part.
When trading, you should watch out for the bid and ask prices provided by your brokerage firm. You can sell the base currency based on the bid price and sell the same based on the ask price.
It was in 1983 that the Hong Kong dollar got pegged to the US dollar. By pegging, the Hong Kong Monetary Authority (HKMA) maintains that the exchange rate of 1 US dollar can only fluctuate between a small spectrum of 7.75 to 7.85 Hong Kong dollars. As a trader, even though this saves you from unexpected fluctuations which may result in huge losses, it also prevents the possibility of making huge profits from a single trade. The only way to make huge profits here is to increase your trading volume, perhaps with the help of leverage.
The currency board system of Hong Kong controls the price movement of USD/HKD. But , within the band of price fluctuations, the influence of many other bodies is visible too. As we mentioned before, Hong Kong Monetary Authority (HKMA) is responsible for the currency peg. Changes in US monetary policy and interest rates, thanks to the US Federal Reserve, can have an impact too. Factors such as GDP growth, inflation, and trade balances of the United States and Hong Kong are major influencing factors too. Geopolitical events, trade relations between the two countries, and the political instability and cross border conflicts can all have an effect in driving the USD/HKD price too.
Q: Is the USD/HKD pair considered a major or minor currency pair?
The relatively lower trading volume of USD/HKD makes it a minor currency pair.
Q: What is the legal tender in Hong Kong?
Hong Kong Dollar is the legal tender in Hong Kong.
Q: Can the USD/HKD rate fluctuate freely?
No, the Hong Kong dollar is pegged to the US dollar, and is allowed to fluctuate within the price band of 7.75 to 7.85 only.
We hope that the above details gave you brief but valuable information for you to decide whether to start trading the USD/HKD currency pair. Join Seven Capitals today to kickstart your forex trading journey, with a minimum deposit as low as $100, and start enjoying several perks such as high leverage, competitive spreads, near-zero commissions, free demo trading account, 24/7 customer support in multiple languages, and much more. Trade on currency pairs, crypto coins, stock indices, precious metals, and energies, all from a single place.
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