Monday, November 2, 2009

3.3 Forex Lexicon : Cross Currency

A cross currency is any pair in which neither currency 
is the U.S. Dollar. These pairs may exhibit erratic price
behavior since the trader has, in effect, initiated two USD trades.
For example, initiating a long (buy) EUR/GBP trade is equivalent
to buying a EUR/USD currency pair and selling a GBP/USD.
Cross currency pairs frequently carry a higher transaction cost.
The three most frequently traded cross rates are

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