FINDING 100% ACCURATE CROSS CURRENCY EXCHANGE RATES

Cross-currency exchange rates help you monitor pair quotes.

Stats suggest 45% of traders 1-2 hours trading each day.

As a trader, this is a must-have tool if you want to accelerate your trading.

Let’s begin our guide and see what cross-exchange rate has in store for us.

WHAT IS CROSS-RATE? EXAMPLE EXPLAINED

First, let’s explain in detail what cross levels are anyway.

You may have to interchange your money against the dollar.

The idea of cross levels revolves around it.

A cross rate is a conversation between two exchanges.

I’m talking about forex pairs here.

Btw, do you know forex is legit?

There are different kinds of forex duos.

We have majors, minors, and exotics.

What defines majors is the presence of the United States dollar.

In major pairs, the greenback determines the levels between two exchanges.

The US dollar is involved in the lion`s share of transactions

Source: New York Fed

Minors are the polar opposite of majors.

Did you know 75% of forex trades happen in forex majors?

Minor pairs don’t have the greenback in them.

Their cross happens on two significant exchanges other than the buck.

For instance, in EUR/GBP, we have EUR and GBP.

They are monies of other nations than the major economies.

These FX pairs have a low volume and are less tradeable than the other two.

Their combo with the greenback marks their cross amount.

Forex major pairs

Forex major pairs

If you are thinking, “Do cross rates help you increase 10% more winning trades”?

Then yeah, you are right!

The swap does help you in winning trades.

There’s one thing you have to remember!

If the greenback is a base, then its value is always one.

To do a swap, you need two transactions.

First, you have to swap one with the United States dollar.

Then, you have to convert it into the other one.

HOW DOES SAFETRADE’S CROSS-CURRENCY TOOL WORK?

It is not hard to track down SafeTrade’s tools.

You can find it on our homepage.

Let’s take a closer look at what the table looks like:

Firstly, you need to head to the Analytics menu on our homepage.

Down there, you can find the tool.

See, I told you it was easy!

On the top, you see a table.

The table is like a crystal ball.

It means your future profits/losses.

Here’s what the table looks like:

Currency exchange rate tool

Currency exchange rate tool

To analyze the tool, you have to know the base and quote of the forex pair.

For instance, if I’m analyzing GBP/USD, I have to know the base and quote.

Do you know the benefit of base and quote currencies’ knowledge?

Around 90% of newbie traders don’t know the difference.

Here GBP is the base, and the US dollar is the quote.

As you can see, there are nine exchanges on the table.

We have EUR, USD, JPY, GBP, CHF, AUD, CAD, NZD, and CNY.

Some of you may raise some eyebrows here.

“Why is CNY on this list”?

Well, I’ll tell you why.

Because of its massive influence on the global economy, the Chinese Yuan pops up here.

On the list, you can see except CNY. All others are forex majors.

They illustrate the moolah of the major economies.

Major pairs account for 67,4 % of the Forex market`s daily volume.

Source: Investopedia

Here’s something interesting!

When you click on the block, it takes you to the Tradingview page. 

For example, if I click on the United States dollar block in front of EUR, it’ll take me to Tradingview’s chart.

Oh man, before I forget, I have to talk about the converter.

You can see we have a converter on the top.

Like a standard converter, it tells the current value of one currency against another.

You just have to choose a value. Put the digit, and voila!

The good thing is, you can choose from every currency on the planet.

While selecting, you see forex majors first.

The converter updates itself according to the actual price.

HOW TO DO CROSS-RATE CALCULATION?

Calculating the swap rate is to find the interchange rate between two exchanges.

The formula for cross-conversion is straightforward.

This section will provide all the calculations vital to the conversion process.

First, it is necessary to understand how the forex market quotes pair.

Two important terms are the “base” and “quote.”

Initially, the larger of the two exchanges was the base.

When you swap a pair, you sell one currency for the United States dollar.

At the same time, you are utilizing that greenback to purchase another.

The fundamental equation is always the same:

A / B = (A / USD) x (USD /B).

Let’s give you an equation here:

Cross exchange rate equation

Cross exchange rate equation

Say you are given an interchange rate of JPY by USD and USD by EUR.

When you arrange it in the equation form, the numerator and the denominator cancel each other.

So you get JPY/EUR.

Can you trade a low-risk currency arbitrage strategy?

This conversion tool may help you to play an arbitrage strategy.

It is a simple way to calculate the swap levels.

We can use both direct and indirect quotations to calculate rates.

Indirect quotations

An indirect quotation is the one in which the amount of base you need to buy quotes.

Let’s explain this with an example.

Suppose you use EUR/USD and EUR/GBP to find the level for EUR/GBP.

First, you need to find the bid/ask price for EUR/USD and GBP/USD.

As I mentioned, the United States dollar as a base always remains 1.

In our example, the United States dollar is the quote in both pairs.

However, the value of the first pair reverts to indirect quotations.

Like EUR/USD becomes USD/EUR.

So, we have to calculate accordingly.

Therefore, the formula becomes

USD/EUR

GBP/USD.

To find the EUR/GBP level, we need to divide the current bid and ask prices.

Direct quotations

The direct quotation is the exact opposite of it.

It expresses the amount of the quote you need to buy one base unit.

Let’s explain this with our previous example.

The values of the first pair don’t revert to direct quotations.

So, considering our previous example, the formula is

EUR/USD

GBP/USD,

We can calculate the direct divide for the EUR/GBP.

You can also find the divide between the three pairs.

Assume that you have a British Pound to convert them into Swedish Krona.

No institution quotes a price of Krone dominated in pounds.

In this case, you have to convert the pounds into euros and convert into Euros and the Krone.

So it’s a three-way trade.

In this way, you can start with pounds and with Krone.

So, there is a form of arbitrage here.

WHY ARE CROSS-CURRENCY EXCHANGE RATES IMPORTANT?

The tool is an essential predictor of a country’s economic conditions.

They have a prominent influence on a country’s degree of commerce.

Let’s see why exchange levels are essential.

Swaps have become a part of daily financial life.

So, how does it happen?

It has happened since the termination of the gold standard and the development of a globalized economy.

Many forex traders use rates for their businesses.

They can benefit significantly from the use of FX pairs.

You can set certain transactions according to specific trends.

The strategy combines unusual combinations.

Interchange values also have an impact on sustained growth.

It makes foreign transfers simpler and significantly cheaper.

You don’t need to convert to USD first.

Only one transaction takes place, which means that only one spread crosses.

Moreover, non-USD pairs do change hands a lot.

FAQs

What are cross rates of currencies?

Cross happens between two pairs against a third one. Generally, pairs excluding the United States dollar makeup crosses. As a base, the US dollar value equals one.

Is there any specific formula for exchange rates?

Yes, there is. It is A/B x B/C = C/B. We have to take the ratio of two corresponding exchanges. For example, EUR/USD x USD/JPY = JPY/USD.

What is the strongest currency in comparison with the US dollar?

KWD or Kuwaiti Dinar is the strongest in comparison with the US dollar. Kuwait is a small country, and due to its significant oil exports, it has the strongest currency in the world. 1 USD equals 0.30 KWD according to the current rate.

Is there a fee for the tool?

Nope. You can use SafeTrade’s tool for free. Just visit the website, go to the analytics menu, and you’ll find the cross-currency tool.

FINAL THOUGHTS

So this was all about it.

I hope now you have a clear idea of what exchange rates are and how they are helpful.

These also help you to analyze the current market trends.

Everything about it is pretty simple.