Want to use currencies to trade on pending deals? Here's a step by step guide.
To use currencies to take positions on cross-border mergers and acquisitions, Rebecca Patterson, global head of currencies and commodities for J.P. Morgan's private bank, recommends starting with the newspaper. Search for announcements of cross-border deals with sizable cash components, she says.
"Right now the good chance is that there will be" a cash component, since companies in the U.S. and elsewhere have plenty of cash, Patterson said. Then, once you've identified a deal, buy the currency of the target company - just the way the acquirer will.
"If I'm a U.S. company and I'm buying a British company, that U.S. company has to buy sterling to buy the company," Patterson told CNBC's Melissa Lee.
It's a good idea to look for big deals, since those currency buys are more likely to move the market, Patterson said. But a series of smaller deals could have the same effect - like the roughly $20 billion in M&A deals in Canada that have to close by the end of the summer.
