if my base currency is USD

Discussion in 'Forex' started by filter, Mar 23, 2010.

  1. filter

    filter Guest

    why should I trade GBP/JPY?
    why not trade GBP/USD alone? because the gain/loss will translate into USD eventually.
  2. Well, if you just want to trade other currencies in relation to the USD, then GBP/USD would be enough.

    However, if you want to bet that the Pound will be stronger than the Yen, you will need to go long on GBP/JPY.

  3. filter

    filter Guest

    then your gain in JPY, and you need to convert it back to USD, right?
    I think market will be very efficient to balance GBP/USD/JPY.

    so that's the equivalent of trading GBP/USD, what do I miss here?

  4. The transaction is really like this:

    Short USD/JPY (Sell USD, Buy JPY)
    Long GBP/JPY (Sell JPY, Buy GBP)
    This is when you go long GBP/JPY. The gain and loss is affected by how JPY move in relation to GBP, and also how JPY move in relation to USD as you convert the gain/loss to your USD account balance.

    But for long GBP/USD, you are just buying GBP, and selling USD. So, in this case, it doesn't matter how JPY move. All it matter is how USD move in relation to GBP.