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Chapter 22, Part II. Crosses – Continuation of Discussion... - Q&A

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Jan 7, 2012.

  1. Administrator

    Administrator Just Administrator :-)

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    Please use this thread for questions, answers, and comments on this lesson.
     
  2. deadducks

    deadducks Recruit

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    I need some clarification on the following:

    Commander in Pips: Well, nothing is wrong with it at all. I just want to say that when we do something, we have to know why we do this, right? So, creating synthetic pair is made for a particular property. For example, it could be applied if some specific cross pair does not show necessary trading volumes and liquidity. In that case some large bank or institutional investor could open so-called synthetic position. Let’s say that it wants to buy NZD/CHF pair, since some big corporate clients from New Zealand want to protect their money and invest them in Switzerland. So, this bank is glad to do this, but it shows tight liquidity and it can’t satisfy all the demanded volume from the clients. When speculation is not the target, then it could sell NZD/USD and buy USD/CHF. These are more liquid pairs and as result this bank will get what it wants – NZD/CHF.

    Shouldn't that be Buy NZD/USD and Buy USD/CHF to result in a Buy of NZD/CHF?

    Eric
     
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Thanks, Eric we will fix it.
    Actually here is mostly another mistake - it should be "sell NZD/CHF", since NZ company wants to invest in Swiss economy. Hence there will be "Sell NZD/USD and sell USD/CHF".

    Thank you anyway.
     
  4. AsstModerator

    AsstModerator FPA Forums and Reviews Admin

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    Fixed, I think.
     

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