Picking Cross Pairs
In the Forex world, a currency cross pair refers to the trading of two currencies that are not the U.S. dollar. They are called cross pairs because before the advent of online Forex trading, to exchange one currency for another, you could only do so by converting to the dollar first. So if you had Japanese yen and wanted to buy pounds from Great Britain, you were required to change your yen to U.S. dollars, and then convert the dollars to the pound. This was an awkward, yet necessary way to ensure that you were given a fair price. You can trade these with the StraddleTrader Pro online.
Now that things are digitized, trading currency is extremely easy—even if you want to trade cross pairs. No longer must you use the U.S. dollar, although many people still do. These cross pairs open up new windows of opportunity for Forex traders. There are only a few widely traded pairs of currencies out there, all of which involve the dollar. There is also the fact that about 90 percent of all currency trading involves the U.S. dollar. This is because of the fact that the dollar is the world’s default currency of choice; major commodities are bought and sold worldwide with the dollar.
By trading a cross pair, you are breaking free of the anti or pro U.S. dollar sentiment game. You do not have to worry about how the world’s most widely traded currency is performing and can instead focus on lesser traded currencies. This opens up so many more trades for you. With a good eye, you can find profitable trades without having to rely on the whims of the dollar.