GBPUSD: paying the spread tax when the idea is somewhere else

[FXS London Scalper]

Pattern I caught in my own journal: I'd have a view on the dollar, say USD weakness after a soft data release, and I'd express it on GBPUSD because it "moves more". But the idea had nothing to do with sterling.

Result: higher spread, more noise from UK-specific headlines, and a worse fill than on EURUSD, which was the cleaner expression of the same idea.

I started calling it the spread tax. You pay for volatility you didn't ask for.

How I check now:

1. Where is the idea? USD, GBP, risk mood, something else?
2. Which pair expresses that idea with the least other noise?
3. Is the cost of that pair at this hour reasonable for the target?

For a pure USD view during London, that is usually EURUSD. For a GBP story, such as UK CPI, GBPUSD or EURGBP make sense, because the idea actually lives there.

Over two months, moving USD trades off GBPUSD reduced my average cost per trade on those ideas by about 0.4 pips, and the hit rate went up slightly too.

Small thing, but it adds up. Do you pick the pair for its movement or for the idea?