Currency pairs

[kevin97531]

My broker doesn't offer all of the currency pairs that I would like. I thought that I could "create" pairs by trading two that I already had.

For instance, I thought that in order to create a long position in EUR/NZD, I could go long EUR/USD and short NZD/USD. This way I am long EUR and short NZD, but I am also both long and short USD which should cancel out. I tested my theory overnight and found that the combination of the EUR/USD and NZD/USD made money while the EUR/NZD position lost money. (This is after factoring in losses for spreads). Where is my logic wrong? Is there a way "create" currency pairs with USD crosses?

[Trevman]

i think you may need to find a diff combo. you used,

EUR/USD
NZD/USD

those together wont cancel the USD side, i think you need

EUR/USD
USD/NZD

so the USD would cancel out then and leave EUR/NZD, i may be wrong though

[kevin97531]

Originally Posted by Trevman

i think you may need to find a diff combo. you used,

EUR/USD
NZD/USD

those together wont cancel the USD side, i think you need

EUR/USD
USD/NZD

so the USD would cancel out then and leave EUR/NZD, i may be wrong though

I shorted NZD/USD, which (as far as I know) is the same as going long in the USD/NZD

[mmont]

EUR/NZD is trading the euro against the kiwi.

EUR/USD...NZD/USD is trading the euro and nzd against the buck.

It's quite different.

I shorted NZD/USD, which (as far as I know) is the same as going long in the USD/NZD

There is no USD/NZD pair

[kevin97531]

Originally Posted by mmont

EUR/NZD is trading the euro against the kiwi.

EUR/USD...NZD/USD is trading the euro and nzd against the buck.

It's quite different.

I shorted NZD/USD, which (as far as I know) is the same as going long in the USD/NZD

There is no USD/NZD pair

Sorry, I guess I didn't really make myself clear in my post. I thought that by trading the both the euro and kiwi against the US dollar you could simulate a position in the euro against the kiwi. In other words the combined profit/loss in your positions in the eur/usd and nzd/usd should equal the profit/loss in your position in eur/nzd. However, this isn't the case and I'm not sure why. Is there any way to simulate positions in non-US dollar crosses?

[mmont]

In other words the combined profit/loss in your positions in the eur/usd and nzd/usd should equal the profit/loss in your position in eur/nzd.

Your previous post was perfectly clear, I guess my responce wasn't.
How the euro reacts against the kiwi is not necessarely how the euro or kiwi reacts against the buck.
Spreading EUR/USD....NZD/USD has very little, if anything to do w/ the price action you might be expecting w/ eud/nzd.

[SeanB]

yeah, it's the relations between the two countries, it would be like asking a stranger about your friends love life?