Curreny Spreading

[clbfjc]

Hi,

I used to trade bond and equity fututres as spreads, (not spreadbetting) i.e Bund vs Bobl or Eurostoxx vs Cac, however have recently traded alot more spot FX's as outright positions. I am more of a technical trader and therefore the FX products suit me better than the others due to there technical nature.

I have never thought of the FX markets in terms of spreaders market, however I am intetereted to know if there is any mileage in reducing risk by spreading ccy's and does anyone do it.

ie using various methods eg

Buying Eur/Usd Selling GBP/USD (using the correct spread ratio's)

or by using FX futures by buying near months selling far months or even using spot market vs the futures market.

Hope people can help and advise if anyone is currently tradeing using any of the methods above or similar.

 

[pippero]

buying eurusd and shorting gbpusd is nothing less (or more) than trading eurgbp outright, if done in the approriate ratio.

spreading futures months is some sort of an interest rate play

you can try arbitrageing spot and futures, but unless you're colocated at the CME you will rarely be filled.

you can play currency correlations for sure, but if both pairs share one currency, you're basically trading the cross give or take a few a pips.

(as in the previous gbpusd eurusd example, as they're both usd pairs)

There are a lot of interesting correlations even among non naturally correlated pairs... check out the attached map. close pairs and darker lines indicate a strong correlation.
(you may need to zoom in to see the symbol names -- there are some futures contracts in there as well, and as you can see everything gravitates around equities)

 

[Alibubble]

I don't think arbitrage works well in this sort of competitive market because if it was so easy to make money like that then everyone would be doing it, especially the big players out there.

Not saying it wouldn't work at all, just that everyone would be doing it if it did.

 

[pippero]

the big players do it infact -- but they have computers colocated at the exchange.