ProfitMax Trading Inc.
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 Posted:
Fri Nov 11, 2005 1:02 am Post subject:
Save those PIPS - Forex |
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If you've been looking at the Currencies for any period of time, most likely
you have noticed that the Swiss Franc and Euro pretty much track. Looking at
both markets in the Futures is almost like looking at twins.
In the Forex these two markets trade as USD/CHF for the Swiss and EUD/USD
for the Euro. Because the USD is the base currency for the USD/CHF pair, the
chart will appear as the inverse to the Swiss Franc chart in the Futures.
The Euro will track with the futures since it is the Euro that is the base
currency of its pair.
So in the Forex, when the USD/CHF is moving up the EUD/USD is moving down,
and vice-versa.
So if you are going to trade the Swiss on the Forex, why not just trade the
EUD/USD instead? Why? Well for one reason the EUD/USD is more liquid than
all the other currency pairs. And for the biggest reason of all, trading the
EUD/USD usually has the smallest spread.
Most FX houses give the EUD/USD a 3-pip spread while the USD/CHF will
usually trade with a 5-pip spread. So it is actually to your advantage to
trade the EUD/USD rather than the USD/CHF and save yourself some spread
costs. If these two didn't track so well it would simply be a matter of
preference. But since these two are basically reflections of each other, it
just makes more sense to save on the spread and benefit off the liquidity.
Just my opinion and I'm sticking to it.
--
Cheers!
Rick J. Ratchford
ProfitMax Trading Inc.
http://www.profitmaxtrading.com
"The KEY to Precision Timing!"
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