Does trading the Cross pairs makes any sense at all?

Does trading the Cross pairs makes any sense at all, other then for hedging and amplification of moves. Why? Take for example: EUR/GBP, it is a result of EUR/USD divided by GBP/USD. SO whatever happens to EUR/GBP is just driven by people trading its components most of the time, not because of its own technical levels.


And i realised that if you divide realtime quotes of EUR/USD by GBP/USD, you will not get the exact of EUR/GBP? Does anybody have any explanation for that?

yes, it makes sense to trade eur/gbp, if european economy is strong and british economy is weak or vice versa.

No idea why it is not the exact same.

I only trade cross-pairs if there is something news related happening to one of the currencies involved. I don't trade news events hardly ever, so I pretty much never trade cross-pairs unless a perfect setup is apparent. Also, only if that setup will cover the 15 pip spread I'll have to pay ;-p

Also it makes sense when the rollover rate is high, like with aud/jpy.

Yes it does make sense. I know it can be argued that one can create synthetic positions to achieve the same result but if there is a setup on the cross then take it. You will see that there are patterns on the crosses even if there aren't on its components so in these cases you can find entries with technical stops and take profits where you would not have been able to with the components.

A perfect example is the recent EUR/JPY trade I took. I was bullish the Euro and thought that the EUR/USD would rise, but at the same time I was extremely bearish on the Yen so the perfect trade was to take the EUR/JPY long to give me the biggest bang for my buck. If you look at the EUR/USD or the USD/JPY you will see that although there has been movement in both the EUR/JPY move paid a lot more and was somewhat less painless.

Truly it makes sense. I know it can be contended that one can make engineered positions to accomplish a similar outcome yet in the event that there is a setup on the cross at that point take it. You will see that there are designs on the crosses regardless of the possibility that there aren't on its segments so in these cases you can discover sections with specialized stops and take benefits where you would not have possessed the capacity to with the segments. An impeccable case is the current EUR/JPY exchange I took. I was bullish the Euro and believed that the EUR/USD would rise, however in the meantime I was to a great degree bearish on the Yen so the ideal exchange was to take the EUR/JPY long to give me the greatest value for my money.

Yeah I think like some people have basically mentioned, no two pairs move in an identical fashion. Even if they mostly move in lock step. You could be trading two highly correlated currencies and one of them hits your target while the other one misses it. This has happened to me before. I don't watch correlations too closely unless I am risking 2% per trade. Otherwise with 1% I figure for mostly every two correlated currencies, one will hit and one will miss. If they both miss, well I've only then risked 2%. I hope that makes sense.