Back in the day when people wanted to trade or convert currency they had to do through the greenback.
. If someone wanted to convert GBP into CHF the had to buy dollar first and then sell it. It is so good to know that now this practice is in the past and all of trading and converting can be done outside of dollar. Currency couple that go around the need of dollar are called cross currency crosses and her is what you need to know about them.
A lot of old technologies couldn’t even count currency crosses but right now all of the trading tools have calculators built in so there is no need for us to know how the counting is done. Even though 80 percent of all the trades involve dollar, there is no need to go through the greenback in order to know the real price for each currency.
Even though it is not necessary to trade USD, it is still dominating the market, as was already said. And countries of the world prefer to hold onto dollar as a stockpile currency. For example, China has over $3 trillion in stockpile! Cool, right?
So, if dollar is so popular, why trade other currencies? Why go to the cross couples in the first place?
Well, they provide much more opportunities for trading. Of course there are major forex couples like GBP/USD, EUR/USD, USD/CHF and USD/JPY but there are also dark horses like AUD/USD, USD/CAD, NZD/USD for example. And the interesting thing is that these currencies need us to trader them. Otherwise there is no support for any of them. Plus, it is good to have a currency that is not tied to the sentiment of the greenback to tightly like All of the popular couples.
Of course being in the major is fun, but minors are waiting for your attention as well.