Today I want to reveal you some information that might seem interesting to you.
Let's look intently at Eur/Gbp. You'll be mistaken if you think there is no USD between them, however when you'll trade this pair USD won't make any influence on it.
Actually all pairs on forex are using USD. When you buy Eur/Gbp your broker just buys Eur/Usd and at the same time sells Gbp/Usd. The Eur/Gbp chart also shows us the difference between these 2 direct pairs. Just divide current price of Eur/Usd on Gbp/Usd and you'll get Eur/Gbp price. Do the math and see for yourself.
The main problem is that two spreads are also put together. This makes trading expensive and you should know that.
There is also an advantage for some people who trade cross pairs. I would recommend using cross pairs for trading on news and for those who follow both economics of the chosen countries.
Trading that uses technical analysis would probably fail here. First of all because there are very low number of players that disable all psychology factors. Secondly there are low amount of trades so triggered stops/limits of other traders won't make a big influence on its rate.
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