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Buying 100K of EUR/AUD is not the same as buying 100k of EUR/USD and selling 100k of AUD/USD.
Using rates of EURUSD = 1.3300 and AUDUSD = 0.79,
if you buy 100k of EURUSD you are long 100k of EUR and short 133k of USD ( 100*1.3300).
If you sell 100k of AUDUSD you are short 100k of AUD and long 79k of USD(100*0.79).
So what you need to do is buy 100k of EURUSD and sell 168.35K (1.3300/0.79) of AUDUSD (168.35k AUD = 168.35*0.79 = 133k USD)
Tom.
----- Message from "C" <camacazi@xxxxxxxxxxxx> on Thu, 25 Nov 2004 17:44:17 +1100 -----
To: <omega-list@xxxxxxxxxx>
Subject: fx quandries
Howdy
I have a system that works well with a FX spot of the EUR vs AUD [or EURAUD
meaning euro /aust dollar]
anyways the spread of the bid and ask of the EURAUD is like 14 pips [ie bid
is 1.6729 and the ask is 1.6743] so basically the commisiion is like 14 pips
or in other words 140$ commission :O( which is bad.....
But.....
looking at the bid/ask of the EUR vs USD its spread is 3 pips [ie bid is
1.3181 and the ask is 1.3184] which is good 30$
....and....
looking at the bid/ask of the AUD vs USD its spread is 3 pips [ie bid is
.7875 and the ask is .7878] which is also good 30$
so isnt buying 100k of of Eur/AUD the same as Buying 100k of the EUR/USD and
Selling 100k of the AUD/USD ? [which costs in spreads 2*30$ which is better
than the spread of the EUR/AUD of 1*140$?]
or am i missing something?
Cheers
Cameron
:O/ [confused yet again]
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