forex-scalping.com

Hardly anyone mentions EURSEK and EURNOK when talking about scalping, and it's partly for a good reason. The books are thin, spreads are wide relative to the typical move, and the pairs often leap in jumps of several points rather than flowing.

What makes them interesting is who trades them. A lot of the flow comes from corporates and funds with Nordic exposure, plus oil-linked demand in the case of NOK. That flow shows up in bursts, often in the European morning and at month-end.

The spread on a retail account can be 15 to 30 points. On a typical day, the pair might range 200 points. A target of 40 or 50 points isn't absurd, but the spread eats a big chunk, and a miss on either side of it matters.

Another quirk is how fast the quote updates. On liquid majors, a feed might deliver dozens of updates per second. On a Scandi cross, there can be several seconds between ticks, and then a jump. A stop placed in the gap fills at the next available price, not the one that was expected.

Mostly these pairs get used as part of other ideas, such as trading relative strength between the euro and the Nordic currencies. As standalone scalping instruments, the costs add up quickly.

A particular feature of Nordic crosses is the effect of Scandinavian data and central bank meetings. The Riksbank and Norges Bank decisions can move the pairs sharply, and because the books are thin, the moves overshoot. Spreads often double in the minutes around such events.

Outside those times, the pairs can grind slowly in one direction for hours with no pullback, which doesn't suit mean-reversion setups either.

Is there any reason to scalp them, or are they better left to slower styles?

I gave EURNOK a proper try a couple of years ago, mainly because it moved so much more than the majors on a typical day. The first few weeks were encouraging on paper, but once I counted the spread, which on my account was around twenty five points most of the morning, my average winner was only slightly larger than the cost of getting in and out.

The thing that put me off for good was a Norges Bank decision. I had a small position on, the quote froze for what felt like several seconds, and when it came back the price had moved well past my stop. The fill was close to double the loss I had planned for that trade.

These days I only look at the Scandi crosses for slower ideas, holding for a day or more when oil and the krone are clearly out of line. For anything with a tight stop, I'd agree they're better left alone, because the cost and the gaps leave almost no room for being right by a small amount.