DislikedI called and they said you were right. All of their clients are up 125% on the GBPJPY carry trade this year just as you predicted. I guess I didn't get the memo.Ignored
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DislikedI called and they said you were right. All of their clients are up 125% on the GBPJPY carry trade this year just as you predicted. I guess I didn't get the memo.Ignored
DislikedThat is interesting; it means that the effective leverage is 15:1 or less. The more that has been made on currency movement the lower the leverage actually is. ...or did you skip the tongue-in-cheek emoticon?Ignored
DislikedUsing real numbers you would need 2 USDCAD contracts to make a GBPCAD (approximately). It's not always a 1:1 relationship to cancel out the USD.Ignored
Dislikedhuh?
we are talking about tri-pair relationships. unless you are just adding an additional insight?Ignored
QuoteDislikedGBP/JPY = GBP/USD x USD/JPY
EUR/CHF = EUR/USD x USD/CHF
EUR/GBP = EUR/USD divided by GBP/USD
GBP/CAD = GBP/USD x USD/CAD
AUD/NZD = AUD/USD divided by NZD/USD
GBP/SINGAPORE DOLLAR = GBP/USD x USD/SGD
Dislikedim simply looking at the prices of the pair. NFX asked why the following equations worked...
and the answer i gave him was to show why it worked.
lets look at it with real prices. take this one for instance...
EUR/CHF = EUR/USD x USD/CHF
in price terms, thats...
1.6738 = 1.4138 x 1.1838
this works for each of the equations given above. i havent tested each but i can tell just by looking at how the fractions are setup.Ignored
DislikedI wish somebody in a brokerage or with long experience could describe what exactly the procedure is for determining the price on a pair after movement on another related pair.Ignored
Dislikedare we talking about the same thing here? NFX listed 6 equations and asked why they work. are you suggesting there is another reason why they work, other than what i have described?Ignored
DislikedI do believe newstrader was however talking about why we used these particular ones, rather than others which also cancel out as fractions. For exampleIgnored
Dislikedthe market sets the price via arbitrage:
but the broker knows where to make his market via the exact formula i just gave. currency pairs are exactly like fractions!Ignored
Dislikedi believe that is done arbitrarily because the dollar is such an important currency.Ignored
Quoting newstraderfxDislikedWhew-I've got a headache!Ignored
DislikedBut what will happen to the dollar versus the pound if there were people buying dollar at the same time? How does the arbitrage work exactly in the interbank?Ignored
DislikedOTOH, making up a synthetic trade to mimic a cross (if you want to hold it for awhile and get precisely the same percentage gain as would show on the cross) is a little difficult, since the weightings of the 2 legs have to change to keep pace.Ignored
Dislikedbut the broker knows where to make his market via the exact formula i just gave. currency pairs are exactly like fractions!Ignored
Dislikedthere are robots that keep all this stuff in line. those 6 equations, and many others, must always hold true. if the equations are NOT true (as happens when news is released) then the robot traders jump on it, buying/selling the appropriate pair. if there were no robots there might be a chance for me and you to make some money like this. i have tried, and had some success during news, but nothing sustainable. arbitrage like this is what holds the financial markets togetherIgnored
DislikedActually I think phil added that as an insight like you said, as I think the math is simple enough to explain why the equation "works". I do believe newstrader was however talking about why we used these particular ones, rather than others which also cancel out as fractions. For example
EURJPY = EURUSD * USDJPY
rather than
EURJPY = EURGBP * GBPJPY
Which still works.
PS: isn't GBPJPY an actual traded pair with considerable volume i.e non-synthetic?Ignored