How to Trade Fundamentals With
Currency Crosses
If strong economic data comes out
of Australia, you might want to look at buying the AUD. Your first reaction
might be to buy AUD/USD.
But what if at the same time,
recent data also show the United States experiencing strong economic growth?
Price action of AUD/USD may be flat.
One option that you have is to
match the AUD against the currency of an economy that isn’t doing so well….
Hmmmm… what could you do?
Ah! Thank the forex gods for
currency crosses!
Let’s say you did some analysis,
checked the BabyPips.com economic calendar (shameless plug!) or Pip Diddy’s
daily economic roundup (another shameless plug!) and you notice that the
Japanese economy isn’t doing so good right now.
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.
Be Careful Trading Obscure Currency Crosses (Part 2)
You don’t want to get stopped out by those nasty spikes, do
you? That’s why most forex traders usually put wider stops when trading these
pairs.
But judging from the choppy movement of obscure crosses, it
would really be tough to catch a good trade on these pairs. Unless you’re a
currency cross guru like Cyclopip, of course!
See what we mean?
Also, since these currency cross pairs aren’t traded too
much by forex traders, the spreads on these pairs can be pretty big.
If you want to trade these currency crosses, just be ready
for some wild price swings and be willing to pay the price of the massive
spread!
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best."
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positive and enthusiastic you become."
By Billy Cox.
Be Careful Trading Obscure Currency Crosses (Part 2)
That’s because most forex traders would rather hang out with
the cool crowd than the obscure crosses!
We’re talking about really weird combinations like AUD/CHF,
AUD/NZD, CAD/CHF, and GBP/CHF. That’s why we call them obscure crosses (duh!).
Trading in these pairs can be more difficult and riskier
than trading euro or yen currency crosses.
Since very few forex traders trade
them, transaction volume is much lower resulting in lower liquidity.
Due to the illiquid markets for these crosses, their prices
can become quite volatile, so being stopped out on whipsaws can become a common
occurrence.
Check out these screenshots of AUD/CHF and GBP/CHF:
"Life will only change when you become more committed
to your dreams than you are to your comfort zone."
By Billy Cox.
Be Careful Trading Obscure Currency
Crosses
While the euro and yen crosses are
the most liquid crosses, more currency crosses exist that don’t even include
the U.S. dollar, euro, or the yen! We’ll call these the “Obscure Currency
Crosses”!
If we were in school – come to
think of it, we actually are in school! – the major pairs would be the jocks
while the obscure currency crosses would be the eccentric emo kids or hipsters.
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Welcome to SSL FXGURU. Our mission is to provide the highest
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Trade Interest Rate Differentials (Part 3)
For example, take a look at the nice uptrend on AUD/JPY. If
you had a long position on this pair, you would’ve made a hefty profit.
On top of that, the interest rate differential between AUD and
JPY was huge. From 2002 to 2007, the Reserve Bank of Australia had raised rates
to 6.25% while the BOJ kept their rates at 0%.
That means you made profits off your long position AND the
interest rate differential on that trade!
Now that’d be an awesome cash cow right there!
Later on in college (if your brain hasn’t exploded with all
this forex knowledge by then), we’ll teach you more about carry trade. We’ll
teach you which ones will work and which ones won’t. We’ll even teach you about
a lil’ something called risk aversion. But that’s for a later lesson.
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far until you change it."
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work you didn’t do."
By Billy Cox.
Trade Interest Rate Differentials
(Part 2)
Currency crosses offer many pairs
with high interest rate differentials that are prime for these types of trades.
"The only difference between a good day and a bad day
is your attitude."
By Billy Cox.
Trade Interest Rate Differentials
By selling currencies whose country has a lower interest
rate against currencies whose country has a higher interest rate, you can
profit from the interest rate differential (known as a carry trade) as well as
price appreciation.
That’s like being able to get a frosted cupcake with
sprinkles on top! That talks to you! Imagine how delicious that would taste!
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thoughts of hope, faith, and confidence."
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limit, and that anything is possible if they want it bad enough."
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Currency Crosses Are Trend-y (Part 2)
The day to day economic activities of the U.S. can keep U.S.
dollar based currencies such as EUR/USD (above) from making smooth trends.
Conversely, we can see that during the same date range,
cross currency EUR/JPY made a much, much smoother ride to the top. This was
probably due to less spikes that came from U.S. data. So as you can see, both
charts showed the euro rise during the same time period, but the one without
the U.S. dollar (EUR/JPY) made for a much easier trade.
Our resident currency cross monster Cyclopip caught a
hundred pips by riding EUR/JPY’s trend. Check out how caught that move!
If you are a trend following kinda dude, then currency
crosses may be easier to trade than the major pairs. It will be easier for you
to spot the trend and be more confident in your entry points because you know
that these technical levels hold more than they do for the majors.
In the next section, we’ll discuss how playing with currency
crosses can also allow you to take advantage of the interest rate
differentials. Now that’s like a cherry on top of a sundae!
"Happy are those who dream dreams and are ready to pay
the price to make them come true."
By L. J. Cardinal Suenens.
Currency Crosses Are Trend-y
Since a majority of the forex
market will deal with the U.S. dollar, you can imagine that many of the news
reports will cause U.S. dollar-based currency pairs to spike. The US has the
largest economy in the world, and as a result, speculators react strongly to
U.S. news reports, even if it doesn’t cause a huge fundamental shift in the
long run.
What this means for your charts is
that you will see several “spikes” even if there is a trend emerging. This can
make it harder to spot trend or range indications.
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If you determined to learn, no one can stop you."
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WHAT ARE YOUR RULES?
The rules are outlined as below:
1. Trade with our Broker account to enjoy GREAT SAVINGS in
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Methodology and System.
4. From every successful withdrawal of profit, kindly donate
10% of your profit to Charity and mail us the receipt. “With a noble attitude
and behavior, all impossibilities will
be made possible.”
5. Send us your trading statement on a monthly basis so that
we can help you keep an eye on your account and advice you on how healthy your
account is and guide and coach you on your withdrawals.
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By Unknown Author.
Why Trade Currency Crosses? (Part 3)
Currency Crosses Provide More Trading Opportunities
Instead of just looking at the seven “major” dollar-based
pairs, currency crosses provide more currency pairs for you to find profitable
opportunities!
By trading currency crosses, you give yourself more options
for trading opportunities because these currencies are not bound to the U.S.
dollar, thus possibly having different price movement behaviors. So while the
majority of the markets will only trade on anti-U.S. dollar or pro-U.S. dollar
sentiments, you can find new opportunities in currency crosses.
Just check out Cyclopip’s Currency Cross-Eyed blog and you’d
realize that crosses present a huge potential for catching plenty of pips!
For example, all the dollar-based pairs might be trading
sideways or in some uglier fashion where it would be smart to just sit on the
sidelines and wait for better trade setups, but if you knew to switch your
charts to look at currency crosses, you might just find trading opportunities
galore!
Be different! The majority of traders just trade the majors.
Now you can be part of the minority that trade currency crosses.
"Strength does not come from winning. Your struggles
develop your strengths. When you go through hardships and decide not to
surrender, that is strength."
By Mahatma Gandhi.
"I’ve found luck is quite predictable. If you want more
luck, take more chances. Be more active. Show up more often."
By Brian Tracy.
Why Trade Currency Crosses? (Part
2)
You can see that by trading any of
the 7 most popular currencies, you are basically taking either an anti-U.S.
dollar or pro-U.S. dollar stance. This one speculation affects these pairs in
almost the same way across the board.
Conversely in the stock market,
traders have multiple companies to choose from and are not bound to one major
speculation idea.
With stocks, you can see that even
though the overall market was positive, there are still plenty of other trading
opportunities. There isn’t just one kind of speculation that affects the entire
basket of stocks. (Continue next week)
"Take a chance! All life is a chance. The man who goes
farthest is generally the one who is willing to do and dare."
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