How to trade cross currency | 90% success cross currency trading

good afternoon good morning good evening everyone 
welcome to our another video here from Diary of a   trader this video we're gonna talk about something 
called cross currency cross currency is nothing   more than a Forex pair that does not have the US 
dollar in the pair so it could be the the Euro   Pound the pound yen any of the yen pairs the 
Aussie dollar Kiwi dollar anything that does   not have the US dollar those are cross currency 
pairs now saying that though it's it's important   to recognize the the influence of the dollar on 
on everything else the dollar is by far by huge   margins the most traded and used currency on the 
planet it is the most reserved highest reserve   currency and in forex the dollar pairs represent 
the great I think I think it's over 80% of the   entire volume is with dollar pairs so knowing 
that it is really important to understand that   how things are performing against the dollar 
can really increase your chances of having   winning trades with cross currency players 
this is actually a huge personal favorite   strategy of mine I generally do not do a lot 
of things outside of technical analysis but   this is a form of analysis that kind of moves 
further into fundamental but either way it is   extremely useful I think you're going to see 
a good example of that today so we have two   charts here on the left side and the right side 
we have $2.00 pair charts okay so we have the   we have the euro dollar and then we have the Euro 
Pound actually I need that to be the pound dollar there we go and the two blue lines are are 
representing the same period of time in both   charts okay so we have the euro dollar on the left 
and then the pound dollar on the right euro dollar   on the left and the cable on the right now you'll 
notice that there's a little difference between   the two charts as we look at them the the price 
action is a little different all right they're   divergent or they're they're going to the opposite 
so you can see on the Left chart from August 6th   to September 25th we see price trading down 
and then from August 6th to the 25th on the   pound on the cable chart we see that trading 
up now how does that help cross currency pairs   well I'm going to show you why because whatever 
you know for if we're gonna look at a pair like   the Euro Pound alright what we're looking at is 
you know comparing the Euro against the pound   has always been a kind of a tricky evaluation 
especially given the brexit issue but that's why   we we try not to look at how the Euro is doing 
versus the pound against one another look at   how they're doing against the dollar so you can 
have to reference the dollar pairs in order to   successfully you know get an advantage in the 
cross currency pair okay so when we're looking   at the Europe the euro dollar on the top left 
what is that doing against the dollar is that   winning or losing its losing against the dollar 
okay it's weakening against the dog so the Euro   is underperforming the dollar I look at that same 
time period over here on the pound dollar on the   cable I see the pound winning or losing against 
the dollar it's gaining so on the on the top right   hand chart the pound dollar is outperforming the 
US dollar and because the US dollar is weighted   so heavily in forex if there is another currency 
that is outperforming it it will more than likely   be outperforming everything else as well so what 
I should see if I'm going to do a cross currency   pair is if I know the pound is beating the dollar 
and the euro is losing against the dollar what   I should see is pound being able to outperform 
the euro and if we look at that same time period   that is exactly what we see have happening over 
here this is the pound euro what do I see have   occurring I see the pound trading up a good amount 
against that's the dollar sorry that's I meant to   have that Euro Pound on there hold on defeated 
the whole flow of everything all right here's   the Euro Pound okay I should see on the Euro 
Pound pair because the Euro is losing against   the dollar just going the inverse now because the 
Euro is losing against the dollar I should see it   it performed poorly against the pound as well is 
that what occurs absolutely the euro is performing   poorly against the dollar it is going to perform 
poorly against the pound why because the pound   is performing better against the dollar okay so 
you got kind of a double whammy going on there   and that occurred you know right around where 
that top was in the Europe out singles true for   pretty much any other type of currency pair if we 
want to look at if we want to look at well let's   look at the Aussie dollar US dollar and let's 
look at another pair of whack so we could look   at the same parents we could we could identify 
if there's some divergence here or not get rid   of that there see if we can identify a time period 
where there's a little bit of change in direction   sometimes you know one thing that you will notice 
is that sometimes you don't find a huge amount of   changes in a lot of pairs as far as their their 
their trend directions related to the dollar   so okay we'll do this there's a October 21st and 
through November 5th so a pretty short time frame I see the I've seen the Aussie dollar US dollar 
trading up here a little bit but then what do I   see in the pound I see it trading pretty flat 
against the US dollar how would I interpret   that well one would interpret that that you should 
see the pound sorry the Aussie dollar performing   better against the pound than the other way 
around is that true well let's check though   we'll check the bottom right chart here this 
is the pound Ozzy dollar and I am looking for   the time period of October 21st through November 
fifth and that is telling me that what occurred   did I see the pound perform weaker against the 
Australian dollar because the Australian dollar   was performing better against the dollar than 
the pound was against the dollar absolutely yes   I see the pound performing weaker against the 
Australian dollar so across currencies are a   lot of fun especially the yen pairs the yen 
pairs are blessed the end pairs are kind of   like their own different beasts as far as the 
the most active like the pound yen is one of   the most active pairs in the world III trade it 
frequently I think if the pair I trade the most   I love I love the pound you end it is a fun 
fun pair and it's it's one of the few cross   currencies or Forex pairs out there that that 
is very active pretty much all day long okay   it is a very active pair it's not like like the 
Euro Looney is can be active but it doesn't have   a whole ton of volume but the pound yen that is a 
very active pair additionally in quote when we're   talking about cross currencies folks should also 
just kind of talk about about the dollar index   because even though you know we're talking about 
cross currencies and non dollar related pairs   when you see the dollar index trading down check 
the other check all the other pairs like the the   euro dollar the pound dollar the Aussie dollar 
the Kiwi dollar if you see the dollar index   trading down figure out which one of those other 
other currencies is performing best against that   dollar and that against the dollar and that is 
the pair that you're probably gonna want to be   bullish on against all the other currencies okay 
whatever currency is outperforming the dollar the   best that is the one that you want to trade and 
that you want to trade and be bullish with okay   whatever is performing the worst against the 
dollar that's the one that you want to sure   that's currency you want a shirt against okay so 
hope you find this video helpful hope you found it   useful and I look forward to speaking with you 
in our future videos have a great day bye bye

pexels photo 210607

As found on YouTube

Learn From the Best at G.O.B.E. Tradehouse

You May Also Like