As you’ve learned, there are many, many trade opportunities presenting themselves in the forex market other than figuring out what the Greenback will do any given day.
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.