The Ultimate Risk Off Trade – EUR / AUD

Of all the currency pairs I track and trade – there is no more a beast than EUR/AUD ( The Euro vs The Australian Dollar).

This currency pair as well as it’s sister pair EUR/NZD makes some of the largest intraday moves of the entire currency world “if not” theeee largest moves, and hav the ability to devastate an account – literally within minutes.

Trading this pair takes acute knowledge of “fundamental under currents” in currency markets, as the pair functions as the “ultimate risk off / on trade”. Get it right, and you can see crazy profits practically overnight…get it wrong and watch your account go to zero. It’s truly a beast and commands the utmost respect. I would argue that this pair is the most volatile / high risk / strange / powerful / beautiful monster in the entire currency world. I love it. I fear it. I trade it.


I am talking about several hundred pip moves ( up and down ) within a single days trading, and as much as “thousand point moves” weekly. Two hundred pip intraday action is totally normal, so for any of you “newbies” hoping to catch a quick buck – you can forget it. The stops needed to trade the pair are larger than your account balance.

Imagine EUR/AUD like a big red button you’ve been presented with, and asked if “you should push it or not” -the temptation is there, but equally the risk.

I am currently long both EUR /AUD as well EUR/NZD and suggesting that risk is – OFF.


5 Responses

  1. David July 10, 2013 / 11:24 am

    Hey Kong,
    What about GBP/AUD and GBP/NZD, the moves on those are similiar but even more extreme… for example, GBP/NZD broke 2.0 not too long ago and a lot of the move has been faded (which tends to be the case), it actually dipped below 1.89 yesterday and I was buying positions under 1.90; it has already moved back up to over 1.91 today; after the FOMC it can easily be 1.93 or back below 1.90.

    Are you looking to short the EUR/AUD in the future, when/if AUD dips to 0.8850 for example? It would seem like a good opportunity depending on where the Euro is trading as the AUD should get a bounce across the board if it tests and holds that level.

    • Forex Kong July 10, 2013 / 12:12 pm

      Equally dangerous yes. VERY DANGEROUS!

      The EU pairs move counter intuatively as they rise in times of risk off…and fall in times of risk appetite.

      Very tough to trade, and very very dangerous as are the pairs you’ve mentioned yes.

      Mucho Respeto!

  2. Deano July 10, 2013 / 5:25 pm

    Totally agree. The daily ATR on the EURAUD is currently 181 pips which is only exceeded by the EURNZD at 223 pips! You can’t get a decent low risk trade with stops larger than this, so its risk mgt 101 and trade small.

    I rode this baby up from 1.22 in April when it went on a tear, but bailed at 1.32 – so happy sad.

    • Forex Kong July 10, 2013 / 5:38 pm

      A special thanks to Deano!

      This guy is the boooomb!

      Yes….these pairs are killer – and seeing profits ( then booking them ) is a tough combo!

      I look at them more like a bit of fun at the end of the day……..if I’m so inclined.

      Roll the dice with the smallest position known to man…..and see if you’re alive in the morning!

      nailing it today was dumb luck as they will just as likely retrace -300 pips tomorrow. In and out! Beer money!

      • Deano July 10, 2013 / 8:14 pm

        Only prob with these pairs is the onerous yield differential. It gets expensive if held for too long, which makes them good sniper trades – get in, get out take your money and have a beer. At least thats the plan! lol

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