According to the different currency pairs, foreign exchange transactions can be divided into direct trading only hope and cross trading. Direct trading refers to currency pairs with U.S. dollars in foreign exchange, such as USD/JPY, GBP/USD, etc., while cross trading refers to currency pairs without U.S. dollars, such as EUR/JPY, EUR/CHF, etc. So, how to choose the currency pair for foreign exchange cross trading?
Foreign exchange cross currency
Investors usually involve U.S. dollars in foreign exchange transactions, but the price of U.S. dollars has changed too much and the fluctuation range is also large. Foreign exchange traders are often exposed to great risks, especially when major events such as natural disasters, man-made disasters, wars, and politics occur, the US dollar will fluctuate. At this time, we can adopt a cross exchange rate method to buy relatively strong currencies while shorting relatively weak currencies.
Cross exchange rate operation mainly considers the choice of currency and masters the background of specific currency exchange rate changes, thereby reducing foreign exchange risks and making more profits. When choosing a currency, one should grasp the three relevant characteristics of the currency in order to make a choice. The characteristics of these three currencies are: robustness, risk aversion and correlation.
After mastering the various characteristics of different currencies, cross-currency exchange rate operations are much more convenient. When we choose a currency, we should pay attention to the two currencies that are closely related to the changes in currency exchange rates and have a large contrast. One of them is a currency with a rapid increase, and the other is a currency with a rapid decline. This kind of buying and selling by using contrast to select currencies has a greater chance of obtaining double-sided benefits due to contrast, and it is less likely to reduce double benefits due to actual reduction in contrast, so the risk of loss due to contrast becoming negative is extremely small. .
It should be noted that when foreign exchange cross trading, avoid the same direction. Try to choose two currencies that buy and sell at the same time. Not only are their exchange rates closely related, but the direction of exchange rate changes is also the same.
According to the above introduction, the currency pairs recommended by the editor here are mainly EUR/JPY, GBP/EUR, GBP/JPY and some foreign exchange currency pairs related to the Swiss franc. Among the first three currency pairs, the trading products are relatively common trading currencies, and the volatility is generally high, with strong operability. In the Swiss franc-related cross currency pairs, because Switzerland is a neutral country, the fluctuation of the Swiss franc is generally not high, so investors are more recommended to trade.
The choice of currency pairs for foreign exchange cross trading is so much that we have introduced above. Here we remind investors that for novices, it is not recommended to trade cross trading. The best product is the direct currency pair related to the US dollar.