Foreign exchange is a very dynamic type of trading. The market is almost always moving, so there’s always some trade that can be done. If you have any experience in this business, you probably know that the American dollar currency pairs (major pairs) are the traded the most. In this Forex currency crosses analysis, however, we will present you with an alternative to trading major pairs. Stay with us!
Forex Currency Crosses | Definition
In this paragraph, we will first define forex currency crosses as pairs of currencies that don’t include the American dollar. Back in the days, when the foreign exchange market wasn’t on this level of development and complexity, one would first have to convert their currency into the USD in order to buy the currency he/she wanted to buy in the first place. However, with the appearance of forex currency crosses everything changed: now there was no need for converting currencies twice. Although the USD is still the most important currency on the market, traders aren’t glued to it anymore, which opens many other trading options. Keep reading and check out all of the possibilities in the following paragraph!
Forex Currency Crosses | Trading
Now then, the American dollar is the currency with the largest trading volume in the world. That’s because the USD is used for pricing a vast majority of agricultural and industrial commodities. Since one has to convert their currency into the USD in order to buy these products, many countries have a reserve of American dollars stored away at all times. Consequently, the USD is the most traded foreign exchange currency. When you’re trading major currency pairs – pairs that have the USD as one of their members – you’re basically trying to predict if the dollar is getting weaker or stronger on any given day.
With forex currency crosses, on the other hand, your trading actions won’t be defined by the market behavior of the greenback. You won’t be trading seven major pairs, but you will get many other new trading opportunities and your chances for profit will increase significantly. The other important thing is that you will always be able to react and ready to trade: even if the dollar-based pairs are trading sideways and there are not much trading possibilities, you can always switch to the forex currency crosses setup and walk away with some profit.
Forex Currency Crosses | Conclusion
As you have seen from our Forex Currency Crosses analysis, this particular type of trading is a must for every serious trader. Your trading actions definitely shouldn’t be defined by just one currency. Although the USD is the most important trading subject, it also limits your trading maneuvers to only seven currency pairs. Therefore, we advise you to learn to trade forex currency crosses, too. It will take you some time to adapt to a slightly different trading surrounding, but you will master a crucial trading skill.