Summary: Currency Crosses
As you can see, there are
many, many trade opportunities presenting themselves in the forex market other
than figuring out what the Greenback will do any given day – and now you know
how to find them! Here are a couple of things to remember:
·
Crosses give forex traders more pairs to trade,
which means more trading opportunities.
·
We normally see cleaner trends and ranges on
currency crosses than we do on majors.
·
You can take advantage of interest rate
differentials by trading currency crosses.
·
Do your due diligence and analysis and match the
strong currencies against the weak ones.
·
If the pair you are looking to trade isn’t
available with your broker, don’t worry. You know how to create a synthetic
pair by simultaneously going long or short two major pairs to create one
currency cross.
·
The most popular euro crosses are the EUR/JPY,
EUR/GBP, and EUR/CHF.
·
GBP/JPY, AUD/JPY, and NZD/JPY are attractive
carry trade currencies because they offer the highest interest rate
differentials against the JPY.
·
When trading obscure currency crosses, watch out
for wild price swings and wider spreads.
·
Even if you wanna stick to the majors, you can
make use of currency crosses to help you decide between which pairs to trade as
crosses can signal which currency is stronger.
·
Don’t forget that moves in currency cross pairs
can have an effect on the majors.
·
Last tip; please be conscientious of the pip
value of the cross you are trading. Some crosses will have a higher or lower
pip value than the majors. This information is good to know for your risk
analysis.
·
So, on the days you may not see any
opportunities in the major pairs, or if you want to avoid the volatility of a
US news event, check out some the currency crosses. You may never know what you
may find!
So you
see, currency crosses aren’t just for weirdos like Cyclopip. If you want to
talk to your fellow forex traders who also play the crosses, our Currency
Crosses forums is the place to be!
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