Attention Short Sellers

Not many people outside the industry know this, but I moderate a huge online forum for Forex traders. Every day, traders write in their thoughts on what’s happening with the currency markets around the world.

So I have my finger to the pulse of what traders are thinking not just here in the U.S., but in Europe and Asia as well.

Recently, they all seem to be watching the same pair – the GBP/USD. In the past two weeks, more traders are posting their thoughts on the GBP/USD forum than even the EUR/USD forum.

In other words, the pound is more popular than the euro. That almost NEVER happens.

It’s pretty easy to see why. As I’ve mentioned in my last two articles, the pound is poised for a major 1000-pip drop. Right now, traders are lining up to watch the show. In fact, jaws have been dropping as the pound has been falling EVEN FASTER than the dollar (7.4% on an unleveraged basis…that’s a 740% move with 100:1 leverage).

However, let me tell you…there are even better plays out there than GBP/USD – plays that could earn you 50% to 100% more in the Forex market. Even better, you won’t be late to the party…

Three Even Better Ways to Short the Pound

Below I’m going to show you three currency cross pairs.

Two of the pairs have already had a 50% larger gain than GBP/USD and one of the pairs has moved TWICE as higher (% wise) than GBP/USD has.

I bet I have your attention now. So let’s look at them.

The first currency cross has actually bolted much higher as the pound has fallen on its face. That currency pair is EUR/GBP. Check it out below.

Who Said the Euro & Pound Have to Trade Together?

Click to enlarge

It’s been amazing. The dollar has plummeted, so you’d think that EUR/USD and GBP/USD would both be rising.

However, traders didn’t account for the fact that it is possible for a currency to fall even faster than the dollar. If a currency managed that, it would actually LOSE GROUND to a falling dollar.

So since EUR/USD has been upward on its chart and GBP/USD has been downward on its chart, it’s caused the EUR/GBP pair to ROCKET higher.

So while GBP/USD has fallen just over 7%, EUR/GBP has rocketed up 10.8% on the very same pound weakness! Keep in mind that these gains are on an unleveraged basis. So the “real” return to the traders account is magnified many times over.

It wasn’t just the euro either. The pound fell just as hard versus the franc too.

Let’s take a look at the chart of GBP/CHF below. It’s also risen in excess of 10% while GBP/USD rose just over 7% in the same time period.

The Pound Fell Even Farther Vs. the Franc than the Buck

Lately, the Swiss franc has been very strong. In fact, it’s been much stronger than the dollar. Just glance at the USD/CHF chart and compare the two.

So it’s no wonder that a stronger franc would do even better against a falling pound than the weaker dollar. This is why GBP/CHF has returned 50% more than GBP/USD as the pound has been sinking.

Okay, if you think that’s something….here’s the finale! It’s GBP/JPY.

While GBP/USD returned just over 7% to short-sellers, anyone shorting the GBP/JPY walked away with double the returns. This pair just gained over 14% on the pair as it fell. Check it out on the chart below.

The Yen Has Been Torturing the Pound…

How in the world did this happen? It’s easily explainable if you compare the USD/JPY and GBP/USD charts. Obviously the buck is weaker and the yen has been stronger.

So it’s no wonder that the “stronger opponent” to the weak pound was the yen. Therefore, the short sellers of GBP/JPY made TWICE the returns by shorting this currency cross as those that just focus on the “major” pair of the GBP/USD.

Turbo-Charge your Returns by turning to the Currency Crosses!

This is the reason why I say it pays to focus on the currency crosses. Every one of these currency crosses had significant gains over the major GBP pair (GBP/USD).

Therefore, don’t rip yourself off by just looking to the majors. Some currency crosses can be even more profitable…

Happy Trading,
Sean Hyman, aka Professor FX

P.S. Attention Forex traders: This February, I’ll be in Arizona for our next FX University. And I’ll be hosting at least one workshop on the fastest way to diversify your trading account into these non-dollar pairs. You can learn more about this dynamite event here.

Average rating
(0 votes)