Forex Exchange Info, Tips & Resources

weng asked:


I have invested on forex market for a while and frequently heard about carry trade. As i know, this term means to buy in like Euro/Yen pair to profit from the difference between the two currency’s interest rate. The diffence in this pair’s interest rate is 3.5% now, but what about the GBD/USD pair which has only o.25% in difference?

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Eweje egboje asked:


forex exchange market.

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Eric F asked:


Hi,

Im wondering whether the cross pair currency rates are determined by speculative traders or arbitrage trading computers. For example you have two liquid pairs:

EUR/USD
USD/CAD

and a cross rate

EUR/CAD

I figure, since most of the speculative trading is done on EUR/USD and USD/CAD, the EUR/CAD exchange rate is made by arbitrage traders adjusting the correct cross rate so there is no cross currency arbitrage. That means there are a lot less speculative trades on the EUR/CAD pair than on the EUR/USD for example, percentage wise that is, right? Given that, trading on the cross rate is alot harder, since the market psychology is made up of less traders and more arb, right?

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