Desk slang for GBP/JPY, a volatile cross that combines sterling's range with the yen's safe-haven swings.
GBP/JPY is known for large daily ranges, which attracts traders looking for movement and punishes those who size it like a major. Both legs are active in different sessions, so it can trend through the asian-session and reverse in London.
Because the yen is a funding currency, the cross falls hard in a carry-unwind. Risk control matters more than usual: the same lot size that is comfortable on EUR/USD can be three times the dollar risk here.
Example: GBP/JPY has a 200-pip average daily range against EUR/USD's 70 pips. A trader using a 1.5x-range stop needs 300 pips on the cross, worth about JPY 300,000 or USD 1,975 per standard-lot.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Contango and backwardation. A futures curve shows what buyers will pay for delivery in one month, two months and so on. When later contracts cost more than the spot price the curve is in contango; when they cost less it is in backwardation.Range versus trend. On the left price keeps bouncing between the same floor and ceiling, which is a range. On the right each high and each low is higher than the last, inside a pair of sloping lines called a channel.
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