Ok, so I understand having an USD account, selling the USD for YEN then buy USD and selling YEN.
What I want to know is this, with the USD account what transactions actually happen when I do something like sell GBP and buy AUD and then buy GBP and sell AUD for a profit???
As far as I understand it, you buy GBP to buy AUD, and then buy USD with GBP which you just bought with AUD, is this right??
Also something else that confuses me is this, with the USD account what happens when I sell AUD and buy USD and then buy AUD and sell USD??? Is is the same thing???
A cross rate is the exchange rate between two non-USD currencies. For example, the exchange rate associated with EUR/NOK would be a cross rate. On the surface, even though USD is not the base or quote currency, it is indirectly involved. The cross rate for EUR/NOK is the result of two separate conversions involving USD: EUR/NOK and USD/NOK.
This equation is dealt with when you make a trade,
ie, if you trade USD/CHF the base currency is USD therefore
the unit size is $1.
But when you trade the EUR/NOK the unit sze is equal to the
base currency which is the EUR, so the calculation is
$1 x EUR/USD exchange rate. As this is ever changing the trade
value is ever changing.
At the moment 1 Euro = $1.34 so a trade of 1 lot = 100 000 units
equals $134 000.
So 1 lot with the Euro as the base currency, is different to 1 lot
with GBP (GBP/USD exchange rate) as the base currency etc.
But as your trade platform does the calculation for you it is really
unnecessary to understand the math involved.