Learn Forex: 2 Benefits of Trading Forex Crosses

Article Summary: Many forex traders focus on trading the major currency pairs (pairs not involving the USDOLLAR. Learn 2 forex trading advantages to benefit from while trading cross pairs.

Most forex research and forex trading volume circles around the USDOLLAR. Limiting your research and forex analysis to just the USD pairs also limits your realm of possible trading opportunities. Here are 2 benefits one can realize while considering the forex cross pairs (register for this free 20 minute New2FX Course if you are interested in learning more about majors and crosses).

2 Advantages of Trading Cross Pairs:

  • Stronger trends can develop in cross pairs versus majors
  • Insulate your trades from US news releases

Stronger Trends

Which currency pair has moved the most since January 1, 2010? Answer: EURNZD which has moved down about 4100 pips.

Learn Forex: Benefit of Trading Crosses – Strong Trends

2_benefits_of_trading_forex_crosses_body_Picture_3.png, Learn Forex: 2 Benefits of Trading Forex Crosses

(Created using FXCM’s Marketscope 2.0 charts)

In fact, the next strongest trends since January 2010 are all cross pairs (EURAUD, GBPNZD, and EURJPY). You would think by listening to the news media about the weak US Dollar that it would be in one of the strongest down trends, but clearly it is not.

Strong trends such as the above are generally created by diverging interest rate expectations. In the case above, the sovereign debt crisis has been taking a toll on the EUR as various parts of the region have been experiencing bank runs. On the other hand, the New Zealand economy has been holding up which has kept their central bank’s target rate relatively high. Therefore, an investor selling Euro to hold Kiwi’s gets paid a daily interest rate to hold the trade open overnight.

2_benefits_of_trading_forex_crosses_body_Picture_2.png, Learn Forex: 2 Benefits of Trading Forex Crosses

(Created using FXCM’s TSII Platforms)

You can see how much the currency pays by checking the dealing rates window of the FXCM Marketscope charts. In the example above, holding a 10k sell position at 5pm ET pays $0.60.

Insulate from US Dollar Moves

The second benefit becomes particularly important during weeks of heavy fundamental news announcements. You can find out if there is a busy calendar by checking on DailyFX’s forex economic calendar.

This current week was especially heavy with 5 central banks releasing their latest change (if any) to their benchmark interest rate. Then, to finish up the week, Friday morning is the announcement of the jobs report through the US Non-Farm Payroll figure.

Needless to say, this produces a lot of potentially market moving event risk on the calendar and trading cross pairs can help insulate our trades of US news releases.

Although it is possible the cross pairs can make a strong move, if you want to be exposed to the market but not have to pick a direction of the US Dollar, then a cross pair is your answer.

Learn Forex: Benefits of Trading Crosses – Insulate from US Dollar

2_benefits_of_trading_forex_crosses_body_Picture_1.png, Learn Forex: 2 Benefits of Trading Forex Crosses

(Created using FXCM’s Marketscope 2.0 charts)

Let’s assume, for a moment, that you want to trade EUR to the downside because you think the pair is overbought. In lieu of trading the EURUSD, look for technical set ups in other cross pairs like EURGBP (see above), EURJPY or EURNZD (see below).

These three pairs were showing technical set ups earlier in the week where the trader would not have to be exposed to the US Dollar and its trends.

Learn Forex: EUR/JPY Largest Mover for Past 10 Days

High Probability Breakout Trading in Forex 12.5 (video 66 minutes with EURNZD Head & Shoulders pattern discussed near 57 minute mark)

Happy Trading!

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX Education

Follow me on Twitter at @JWagnerFXTrader.To be added to Jeremy’s e-mail distribution list, click HERE and enter in your email information.

Been trading FX but wanting to learn more? Been trading other markets, but not sure where to start you forex analysis? Register and take this Trader Quiz where upon completion you will be provided with a curriculum of resources geared towards your learning experience.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • China's Xi says will keep economic growth healthy Reuters - 2 minutes 28 seconds ago

    BEIJING (Reuters) - China will keep economic growth healthy and supply-side reform will be priority for its economic development, the official Xinhua news agency quoted President Xi Jinping as saying. ... … More »

  • Glencore's underlying profit falls, lowers debt target
    Glencore's underlying profit falls, lowers debt target Reuters - 6 minutes ago

    LONDON/MOSCOW (Reuters) - Glencore said it expected to exceed a previous target to cut debt but it took a nearly $400 million hit from a bad bet on coal and echoed warnings voiced by mining rivals of volatile commodity markets. Along with Anglo … More »

  • Angry Birds maker Rovio turns first-half profit, plans movie sequel Reuters - 16 minutes ago

    Rovio Entertainment Ltd, the maker of mobile phone games and animations, turned a profit from the first half of the year and said it was planning a sequel to its Angry Birds Movie. The Finnish company reported on Wednesday its adjusted operating … More »

  • Angry Birds maker Rovio turns H1 profit, plans movie sequel
    Angry Birds maker Rovio turns H1 profit, plans movie sequel Reuters - 19 minutes ago

    Rovio Entertainment Ltd, the maker of mobile phone games and animations, turned a profit from the first half of the year and said it was planning a sequel to its Angry Birds Movie. The Finnish company reported on Wednesday its adjusted operating … More »

  • China Says Door Ajar for Xi-Abe Summit at G-20 Next Month Bloomberg - 26 minutes ago

    Speaking after a meeting in Tokyo with Japanese counterpart Fumio Kishida, Wang said that the two sides had to create a "good atmosphere" for a summit to take place between President Xi Jinping and Prime Minister Shinzo Abe at the gathering in the … More »

  • Glencore delays resumption of Katanga production to early 2018
    Glencore delays resumption of Katanga production to early 2018 Reuters - 39 minutes ago

    Mining and trading giant Glencore Plc (GLEN.L) will delay resuming production at its Katanga Mining unit (KAT.TO) to early 2018 due to stubbornly low copper prices, Chief Executive Ivan Glasenberg said on Wednesday. Katanga announced an 18-month … More »

  • WPP sees signs of post-Brexit recovery in British ad market Reuters - 41 minutes ago

    WPP (WPP.L), the world's largest advertising group, reported a better than expected jump in first-half net sales and said its British operations showed signs in July of a "post-Brexit recovery", sending its shares to a record high. Run by … More »

  • OneSavings more keen on lending to professional landlords after EU vote Reuters - 45 minutes ago

    The bank also said underlying pretax profit jumped 36 percent to 64.6 million pounds , ahead of consensus estimates, as it issued more mortgages and loans to small and medium-sized businesses over the six months to June 30. OneSavings, one of the … More »

  • PetroChina Posts Smallest Half-Year Profit on Oil’s Meltdown (2) Bloomberg - 45 minutes ago

    (Bloomberg) -- PetroChina Co., the country’s biggest oil and gas producer, posted its smallest half-year profit since it was publicly listed in 2000 as the crash in oil prices continues to drag on earnings. … More »

  • Turkey launches anti-IS operation in Syria
    Turkey launches anti-IS operation in Syria AFP News - 1 hour 0 minutes ago

    Turkey's army backed by international coalition air strikes on Wednesday launched an operation involving fighter jets and tanks to drive Islamic State jihadists out of a key Syrian border town. The air and ground operation, the most ambitious … More »

  • Paddy Power Betfair expects faster cost savings from merger Reuters - 1 hour 4 minutes ago

    Gambling company Paddy Power Betfair (PPB.I) (PPB.L) increased the scale and pace of cost savings from its merger, fleshing out its strategy following a 31 percent jump in first-half earnings. Online betting exchange Betfair and Paddy Power, which … More »

  • PBOC Adds Funds in 14-Day Reverse Repos First Time in Six Months Bloomberg - 1 hour 6 minutes ago

    The People’s Bank of China auctioned 50 billion yuan ($7.5 billion) of the contracts in open-market operations at 2.4 percent Wednesday, according to a statement on its website. The central bank also offered 90 billion yuan of seven-day reverse … More »

  • Global shares lackluster ahead of Fed chair's speech
    Global shares lackluster ahead of Fed chair's speech Associated Press - 1 hour 10 minutes ago

    Asian stocks meandered Wednesday as investors awaited fresh cues from Federal Reserve on the outlook for interest rates. Markets were steady following the submarine launch of a ballistic missile by North ... … More »

  • Glencore Widens Debt Plan to Weather Rout After Worst Profit (2) Bloomberg - 1 hour 16 minutes ago

    Last year’s collapse in commodities and Glencore shares forced the firm to roll out a rescue strategy that included scrapping its dividend, selling $2.5 billion of stock, disposing of assets and slashing spending. “The mining sector is still in … More »

  • Qatari state fund buys stake in NY's Empire State Building Associated Press - 1 hour 16 minutes ago

    Qatar's sovereign wealth fund has made an iconic purchase in America — a stake in the company owning New York's Empire State Building. The Empire State Realty Trust Inc., which manages the building, said ... … More »

  • Gold steady as investors await U.S. rate hike clues
    Gold steady as investors await U.S. rate hike clues Reuters - 1 hour 20 minutes ago

    At the end of the week, Fed Chair Janet Yellen is scheduled to address a gathering of global central bankers in Jackson Hole, Wyoming. Recent hawkish comments from some policymakers have raised investors' expectations that Yellen might also take a … More »

  • Commodities giant Glencore trims loss after asset sales Associated Press - 1 hour 21 minutes ago

    Swiss commodities producer Glencore says it narrowed its net loss in the first half of 2016, after selling billions of dollars' worth of assets to slash debt as global economic concerns soured the market ... … More »

  • Asian Stocks Outside Japan Decline as Hong Kong Shares Retreat Bloomberg - 1 hour 24 minutes ago

    The MSCI Asia Pacific Excluding Japan Index dropped 0.4 percent to 447.11 as of 4:19 p.m. in Hong Kong. The Hang Seng Index slid the most in three weeks on speculation recent gains were overdone. Japan’s Topix index increased 0.7 percent as the … More »

  • Era of Raiders Dawns in China Fueled by Money From Shadows (2) Bloomberg - 1 hour 26 minutes ago

    While the battle for China Vanke Co. isn’t exactly the "Barbarians at the Gate" takeover of RJR Nabisco by private equity firm Kohlberg Kravis Roberts & Co. during the leveraged-buyout boom of the 1980s, the scale and significance may turn out to be … More »

  • Cnooc Posts Half-Year Loss on Canadian Oil Sands Charge (1) Bloomberg - 1 hour 28 minutes ago

    Oil and gas revenue fell 28.5 percent to 55.08 billion yuan. Cnooc’s output in the first six months of the year rose 0.6 percent to 241.5 million barrels of oil equivalent, Cnooc said in the statement. Cnooc said in January that full-year … More »

  • Emerging Markets Fall on Fed Bets as Oil Leads Commodities Lower Bloomberg - 1 hour 29 minutes ago

    The MSCI gauge of developing nations’ shares dropped the most in three weeks after Fed funds futures ended Tuesday showing a 54 percent chance of a U.S. interest-rate increase by December. Basic-resource stocks fell in Europe as Glencore Plc’s … More »

  • Malaysia's B10 biodiesel programme to start in Q4 - minister Reuters - 1 hour 48 minutes ago

    Malaysia will delay the implementation of a higher biodiesel mandate to the fourth quarter from its earlier plan of July, the minister of plantation industries and commodities said on Wednesday. It was initially scheduled for implementation in June … More »

  • Asian markets struggle, oil losses widen on glut woe
    Asian markets struggle, oil losses widen on glut woe AFP News - 1 hour 51 minutes ago

    Most Asian markets slipped Wednesday as traders trod water ahead of a key speech by Federal Reserve boss Janet Yellen this week, while oil suffered fresh losses on persistent glut worries. With speculation growing that US interest rates could rise … More »

  • Biden in Ankara as Turkey launches Syria operation
    Biden in Ankara as Turkey launches Syria operation AFP News - 1 hour 57 minutes ago

    US Vice President Joe Biden arrived in Turkey on Wednesday for critical talks with its leadership as Ankara launched a military operation to drive Islamic State jihadists out of a key Syrian border town. In the highest-ranking visit by a Western … More »

  • UK carpet seller Headlam ups prices after post-Brexit sterling weakness Reuters - 2 hours 1 minute ago

    British carpet distributor Headlam (HEAD.L) has raised its prices after a weaker pound in the wake of the Brexit vote pushed up the cost of imports from continental Europe, showing the potential inflationary impact of sterling's decline. Headlam, … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.1290.0000.00%
    N21.SI
    0.250.00-1.96%
    5ME.SI
    0.60+0.04+6.57%
    5TP.SI
    0.99-0.02-1.98%
    Y92.SI
    0.156+0.007+4.70%
    AFC.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    0.30+0.06+22.45%
    T18.SI
    0.15+0.02+15.38%
    5TI.SI
    0.225+0.025+12.50%
    Y35.SI
    0.51+0.05+12.09%
    BHU.SI
    0.162+0.017+11.72%
    QS9.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.011-0.115-91.27%
    QF6.SI
    0.23-0.17-42.50%
    AWI.SI
    0.205-0.055-21.15%
    I06.SI
    0.45-0.10-18.18%
    BFK.SI
    0.385-0.085-18.09%
    E8Z.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3527+0.0014+0.11%
    USDSGD=X
    1.5261-0.0009-0.06%
    EURSGD=X
    1.7895+0.0068+0.38%
    GBPSGD=X
    74.0690-0.04-0.05%
    SGDJPY=X
    5.7292-0.0063-0.11%
    SGDHKD=X
    2.9849+0.0091+0.31%
    SGDMYR=X
    9,791.7715-24.9326-0.25%
    SGDIDR=X
    4.9166+0.0032+0.07%
    SGDCNY=X
    1.0309+0.0019+0.19%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,341.20-4.90-0.36%
    GCZ16.CMX
    18.83-0.10-0.51%
    SIU16.CMX
    103.89-1.81-1.72%
    ^XAU
    2.11-0.01-0.38%
    HGU16.CMX
    47.30-0.80-1.66%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.14+0.01
    ^FVX
    1.55+0.01
    ^TNX
    2.240.00
    ^TYX