Usd => Abc/xyz

Discussion in 'Forex' started by ramack, Oct 6, 2012.

  1. ramack


    I am trying to understand something that is very basic and fundamental, but I'm missing what I feel is a critical step in Fx in going long or short in the crosses.

    Being in the USA, all my transactions start and end with the USD. So...say I go long on a pair, EURUSD, I am selling dollars and buying EURs. I've got that part, no problem.

    But how are the major and minor crosses handled? Ie, I want to go long on EURGBP. So for this example I am selling GBP and buying EUR. At the broker level when funds for the lot are debited from my account, they withdraw USD to complete the long EURGBP transaction. Seems like the first step in the transaction is going long on GBPUSD, selling USD, buying GBP. How does the broker exchange USD for the EURGBP long position?