Ever wonder how the value of a forex cross is calculated?

Discussion in 'Educational Resources' started by LearningMarkets, Aug 21, 2008.

  1. LearningMarkets

    LearningMarkets ET Sponsor

    This was a subject I addressed a few months ago following several questions about how crosses and their pip values work. I have been getting those questions again a lot lately. This is an important subject to understand if you are going to try to balance positions within a portfolio or just want to understand how one currency compares to another within a forex pair.

    Understanding how a forex cross is calculated can help to understand how currencies affect each other. Using this calculation also makes it possible to creat synthetic crosses to find trading opportunities.

    Check out a video on this topic here: http://www.pfxglobal.com/forex-video-archives/how-a-forex-cross-is-calculated.html
  2. euclid


    What a dreadful video. How could anybody learn anything from that.

    Nobody should be trading forex anyway if they can't do basic arithmetic.

    You shouldn't be teaching forex if you yourselves don't understand the basics.

    In your video you were attempting to create a synthetic NZDCAD cross using NZDUSD and USDCAD. You used the ratio of the values of NZD and CAD to calculate the number of contracts. You should be aware that the USDCAD contract is demoninated in USD, so you should have used the ratio of NZD to USD to calculate the number of contracts.