Mindblown: a blog about philosophy.
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Trade Weighted Dollar Index
There is also another kind of U.S. dollar index. It was created by the Federal Reserve and is now used widely by lots of sexy people, like economists and currency analysts. It is called the “Trade Weighted U.S. Dollar Index“. You can find it on the Federal Reserve Economic Data (FRED) website here. Their website is probably one…
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How to Use the USDX for Forex Trading
I bet you’re wondering, “How do I use this USDX in my trading arsenal?” Well, hold your trigger finger and you’ll soon find out! We all know that most of the widely traded currency pairs include the U.S. dollar. If you don’t know, some that include the U.S. dollar are EUR/USD, GBP/USD, USD/CHF, USD/JPY, and USD/CAD. What does this mean? If…
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How to Read the US Dollar Index
Just like any currency pair, the US Dollar Index (USDX) even has its own chart. Holler at the U.S. Dollar Index: First, notice that the index is calculated 24 hours a day, five days a week. Also, the US Dollar Index (USDX) measures the dollar’s general value relative to a base of 100.000. Huh?!? Okay. For example,…
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What is the US Dollar Index (USDX)?
If you’ve traded stocks, you’re probably familiar with all the indices available such as the Dow Jones Industrial Average (DJIA), NASDAQ Composite Index, Russell 2000, S&P 500, Wilshire 5000, and the Nimbus 2001. Oh wait, that last one is actually Harry Potter’s broomstick. Well if U.S. stocks have an index, the U.S. dollar can’t be…
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Summary: Carry Trade
A carry trade is when you borrow one financial instrument (like USD currency) and use that to buy another financial instrument (like JPY currency). While you are paying the low interest rate on the financial instrument you borrowed/sold, you are collecting higher interest on the financial instrument you purchased. Your profit is the money you collect from…
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Carry Trade Criteria and Risk
Let’s go over the criteria for a carry trade. It’s pretty simple to find a suitable pair to do a carry trade. Look for two things: Find a high interest differential. Find a pair that has been stable or in an uptrend in favor of the higher-yielding currency. This gives you the ability to stay…
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Know When Carry Trades Work and When They Don’t
When do carry trades work? Carry trades work best when investors feel risky and optimistic enough to buy high-yielding currencies and sell lower-yielding currencies. It’s kinda like an optimist who sees the glass half full. While the current situation might not be ideal, he is hopeful that things will get better. The same goes for carry trade. Economic conditions…
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What is a Currency Carry Trade?
In the forex market, currencies are traded in pairs (for example, if you buy USD/CHF, you are actually buying the U.S. dollar and selling Swiss francs at the same time). You pay interest on the currency position you SELL and collect interest on the currency position you BUY. What makes the carry trade special in the spot forex…
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What is the Carry Trade?
Did you know there is a trading strategy that can make money if the price stayed exactly the same for long periods of time? Well, there is and it’s one the most popular ways of making money by many of the biggest and baddest money manager mamajamas in the financial universe! It’s called the “Carry…
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Summary: Trading the News
When trading the news, you can either have a directional bias or a non-directional bias. Here are some other things to keep in mind when news trading: When you have a directional bias, you are expecting the price to move in a certain direction, and you’ve got your orders in already. It is always good to…
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