DESCRIPTION: Below is the list of reasons why you should consider adding the cross-currency pairs to your trading portfolio:
1) Trade without being tied to the US dollar
When you trade currency pairs linked to the US dollar, you are limited to a single prediction of whether the US dollar might go up or down. However, with cross-currency pairs, you can consider other factors that are not affected by the US dollar and discover more trading opportunities. Trading cross-currency pairs can also be a part of your go-to trading strategy if you need to wait out volatile trading conditions with the US dollar.
2) Diversify your portfolio
Trading different instruments help you to keep your portfolio varied and may increase your chances of enhanced potential profit. Plus, you also have the chance to trade currency pairs, which are sensitive to price movements in the commodities market because those countries produce and export various goods and services.
3) Hedging
It is a strategy in which you secure your trade (if the market doesn’t move in your favor) by also placing an opposite trade. You can spread out the risk by trading different cross-currency pairs in order to secure yourself against the volatility of cross-currency rates.
4) Increase your trade volume during specific world events
In the past, if you wanted to capitalize on a world event that wasn’t tied to the US dollar, you would have to place 2 separate trades, incurring 2 transaction fees. You get to place a trade directly on the currency itself – EUR/GBP. So your capital can be used to increase your trade volume instead of being used for transaction fees for several trades. Cross-currency trading can present some unique trading opportunities that you may want to explore. Depending on which cross-currency pair you want to trade, you can trade CFDs on Deriv MT5, Deriv X and CTror go for options and multipliers trading on DTrader.
Disclaimer: Options trading and Deriv X Platform are not available for clients residing within the EU. This content is not intended for clients residing in the UK.