Spreading Forex

so for instance, if you wanted to get short EUR/USD the spread would look like

short EUR/AUD
short AUD/USD

short EUR/CAD
long USD/CAD

short EUR/CHF
long USD/CHF

short EUR/GBP
short GBP/USD

short EUR/JPY
long USD/JPY

 

Enter lot sizes on a 1:1 basis or ?

 

you tell me, I'm just a beginner. Yeah I guess 1:1, but I haven't thought it through that deep.

 

So why would you do that instead of trading eur/usd outright? You have probably higher bid/ask spread and incur higher execution risk due to the 2 legs.

IMO it only makes sense if you want to trade a particular pair that your broker doesnt offer.

 

well, us old spread traders are too scared to ever take a position outright, and for years we have endured the criticism that spreads incur more commissions.

 

But thats not like a spread in interest rate futures, or a GOOG/AAPL spread. You end up with an eur/usd position - there is no difference expcept higher transaction costs. Risk is the same.

Additionally at most brokers (i.e. not IB) you have 2x the margin requirement and pay the roll on each trade.

 

yeah, well unless AUD starts moving against CAD

 

so the big idea is you want to get short EUR and long USD, but you just keep working the spread.

and as murray would say *not a reccomendation*&^%$

 

when you think about it forex is the true zero sum game. Most of the money just goes from one currency to another. How could it be otherwise? Is there ever really new money entering or old money leaving?

 

What is the reason for such synthetics when most pairs are available outright and in effect are absolutely the same (but spread is more actions and more commission)?