Q: Do currency crosses have the ability to drive major pairs?

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Question:

Do currency crosses have the ability to drive major pairs? How do you know if the cross price action is dependent or independent of the underlying currency involved?

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Answer:

Yes! Currency crosses DO have the ability to drive movements in the majors and this is particularly true for the Japanese Yen crosses. There could be a situation where traders are dumping everything related to the “Yen” including EUR/JPY for example and if the sell-off is strong enough, it will also drive the EUR/USD lower. Currency crosses can also drive the movements in the majors when there are large merger and acquisition transactions that require a currency conversion. For example, if an Australian company decides to invest in or buy a Canadian company, that will involve a large conversion of Australian dollars into Canadian dollars. When that occurs the big move will be in AUD/CAD but we can also see the transaction drive the AUD/USD and USD/CAD lower.

**Stops can be subject to slippage by your broker

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Q: Can You Predict Fundamental Data in Forex

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Question:

Is there a way to predict fundamental data before it comes out? If so how?

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Answer:

Thank you for your question! There is of course no foolproof way to predict fundamental data in FX but at BK we have put in hundreds of man hours of research in trying to handicap economic reports. Economic data is like a puzzle made up of smaller pieces. For example the country’s GDP can be greatly influenced by Retail Sales and Trade Balance data, so if you have those pieces of information ahead of time you can sometimes come up with more accurate prediction than the market consensus. In the forex market there are scores of such economic clues that can shed light on the key data releases and while it is almost impossible to predict with precision traders can often get an idea of whether the data will beat or miss consensus expectations.

**Stops can be subject to slippage by your broker

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Q: Forex Trading with Small vs. Big Stops

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Question:

Hi Kathy, Boris. I am following you on CNBC and twitter every day. I am trading forex now since August last year. I started off very well, had good profits within a few months. Right now I try to trade smaller positions with a smaller Stop Loss and seem to lose more than when I was trading larger positions. Does it make more sense in your opinion to do less more valuable trades within a day, rather than lots of small trades? Thanks in advance.

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Answer:

Thank you for your question! There are many different ways to approach forex trading – one is to aim for smaller profits with a tighter stop loss and the other is to have wider stops and larger targets and there are pros and cons of both. Which one you pick really depends on your style of trading and your personality – not everyone has the stomach for large stop losses and could second guess their positions every 10 pip move against them. The key to short term trading is to use a stop that is not too large or too small. Typically with our own short term trading, we use a stop of 30 to 50 pips. If you use a stop of 10-15 pips on a short term trade, the odds of being stopped out is higher. Along these lines, it is important to realize that a 30-pip stop in the EUR/USD is very different from a 30 pip stop in GBP/JPY, which has greater volatility because a 30 pip move in the EUR/USD is more significant than the same move in GBP/JPY.

**Stops can be subject to slippage by your broker

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