EURNZD and the cost of a cross with two small legs

[Fairman]

EURNZD and the cost of a cross with two small legs

EURNZD combines a deep currency with a shallow one. The spread shows it: often 3 to 6 pips on retail platforms, compared with under 1 on EURUSD.

The cost isn't the only issue. The pair's movement is jumpy. Quotes update in steps, and a few seconds of silence can be followed by a 4 pip jump. Stops placed 5 pips away are well within the noise.

Because it's built from EURUSD and NZDUSD, any thin moment in NZD gets magnified. A New Zealand data release during the New York evening can move it 40 pips, with spreads blowing out to 10.

The best time to trade it is during the European morning, when EUR is active and NZD has some leftover liquidity from Asia. After the European close, the pair becomes expensive.

Most scalpers will find better value elsewhere. The pair exists mainly for people with a macro view or a need for specific exposure, who accept the cost.

Where is the best window of the day for EURNZD on the platform used here?

[Amanhasnoname]

I traded EURNZD for a short spell because it looked like it moved a lot, and the movement turned out to be mostly cost. On my broker the spread sat around 4 pips in the Frankfurt hour and widened past 8 after London closed, which made any target under 20 pips hard to justify. The stepped quotes you mention were the part I found hardest. Price would freeze, then gap several pips, and my stops kept filling worse than where I had placed them.

The only window that worked even reasonably for me was from about the London open until just before lunch. Euro liquidity was strong then and the spread was at its narrowest of the day. I still needed stops of at least 15 pips to stay outside the noise.

In the end I worked out that trading EURUSD and NZDUSD separately, when each had its own reason to move, gave me cleaner fills for the same idea. The cross only made sense when I had a clear view on both legs at once.