How a Forex Cross Is Calculated

07/31/2008 12:00 am EST

Focus: FOREX

John Jagerson

Co-Founder and Contributor, LearningMarkets.com

This was a subject I addressed a few months ago following several questions about how crosses and their pip values work. I have been getting those questions again a lot lately. This is an important subject to understand if you are going to try to balance positions within a portfolio or just want to understand how one currency compares to another within a forex cross. Understanding how a forex cross is calculated can help to understand how currencies affect each other. Using this calculation also makes it possible to creat synthetic crosses to find trading opportunities.

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