Trading Synthetic Pairs?

G

gaussian

Hello all. Quick question.

I would like to trade CADUSD for a strategy I am testing out. However, my broker does not offer it.

I was wondering - what is the best way to create a synthetic CADUSD? Since it is a ratio it strikes me as obvious to do 1/USDCAD_PRICE, however I am wondering if I am missing any external variables that would cause this relationship to not hold.

Thank you!
 
How come you trade forex with a broker that doesn't allow shorting a major pair like USD/CAD? Is it a regulatory restriction?
 
tomorton said:
How come you trade forex with a broker that doesn't allow shorting a major pair like USD/CAD? Is it a regulatory restriction?
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I was looking at CADUSD as an example - which isnt a pair offered at any major NFA associated broker I know of (Oanda, Forex.com). Additionally, it seems impossible to find any forex broker that offers a pair like JPYUSD.

Do you know of a place that does offer these?
 
No I don't. Surely, they don't exist because the industry offers the chance to either buy or short the major pairs? There's no point a firm offering USD/XXX and XXX/USD when they offer the service to buy or short USD/XXX. Surely you can do this via Oanda etc.?

Yes, there will be some exotic pairs that you would have to work hard to synthesise, for example ZAR/SGD or TRY/MXN. But why do this?
 
gaussian said:
obvious to do 1/USDCAD_PRICE, however I am wondering if I am missing any external variables that would cause this relationship to not hold.
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Yes, 1/USDCAD would do it. No missing external factors, relationship is a mathematical identity.

Also the 6C CME Canadian Dollar future is CADUSD (100k CAD). It has reasonable volume and liquidity for small size in the active month and a better swap rate built in to the price.
 
Kevin Schmit said:
Yes, 1/USDCAD would do it. No missing external factors, relationship is a mathematical identity.

Also the 6C CME Canadian Dollar future is CADUSD (100k CAD). It has reasonable volume and liquidity for small size in the active month and a better swap rate built in to the price.
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Good to know. I dont see any way to create a pair for JPYUSD from existing pairs. It seems because JPY is never used as a base currency there is no way to create it out of existing majors and crosses?
 
Shorting USDCAD will give you the exact return of long CADUSD, and vice versa.

Shorting USDJPY will give the exact return of long JPYUSD and vice versa.

BTW, CME JPY futures (6J) track JPYUSD
 
Why not use USDCAD instead of confusing someone with CADUSD. Which broker does not have USDCAD on their platform?
 
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