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Chapter 22, Part II. Crosses – Continuation of Discussion... Page 3

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 22, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Additional crosses’ utility

    Commander in Pips: Since in previous chapter we’ve spoken about fundamental analysis, let’s discuss how crosses could help us here. The major idea is to extract particular news and trade them purely.

    Pipruit: I can't follow what is said.​


    Commander in Pips: Ok, here is some hint to you. Assume that you are waiting for Bank of Australia rate decision. The most common way to trade this news is focus on AUD/USD. Unfortunately there are some data from US expected at the same time. Here you fall into indecision – since your analysis BoA rate decision could be vanquished by unknown data character from US – will they appear to be positive or not? You sure with your expectation about rate, but you absolutely don’t know what data will be from US. What to do?

    Pipruit: Well, you should somehow focus purely on AUD and eliminate impact of USD…​


    Commander in Pips: Right, but how?

    Pipruit: Ok, I’ve got your clue – we should focus on some cross pair. In this case we will not care about US data at all. ​


    Commander in Pips: Absolutely. For instance on some crosses, that have some stable information about some currency, or that will not show any data on some currency. For instance the same AUD/JPY, in fact it could be any AUD pair – say, AUD/CHF.

    The major idea of this approach is that we do not have to do things the difficult way. Although a trader’s job is itself a hard journey, we have to make short-cuts where we can and make our work simpler where we can. If it will let us make nice trade with lower risk – we must do that. Applying crosses in such a manner allows us to extract specific macro data, news or events and trade them separately to catch the effect only from this particular event or news.
     
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