US Dollar Index
The US Dollar Index Futures Contracts are traded on the New York Board of Trade at Finex and at the Chicago Mercantile Exchange (CME). The US Dollar Index is widely quoted in the press and on quote services and is used by traders to get the big picture of the overall trend of the dollar.
The Federal Reserve Board had introduced the US Dollar Index in 2003. The index is the result of the Smithsonian Agreement that had replaced the Bretton Woods Agreement. The US Dollar Index is similar to the Feds Dollar Index which is a trade weighted index. The Fed gives value to each individual currency in the index based on how much it trades with the US.
However, the value of US Dollar Index and the Feds Dollar Index is different and it should not be confused with one another. The futures contract expires on March, June, September and December. The minimum tick on the US Dollar Index is 0.1 and equals $10.
The overall value of the contract on the index is 1,000 times the value of the index in dollars. Delivery is physical. It means that you receive dollars based on the value of the index on the second business day prior to the third Wednesday during the month of the expiring contract.
Delivery day is the third Wednesday of the contract month. No trading limits are placed on the US Dollar Index. Trading hours are from 8.05 AM to 3:00 PM with the overnight trading from 7 PM to 10 PM.
The US Dollar Index was modified at the inception of the Euro. It is weighted in a way thats similar to the Feds trade weighted index as follows: Euro 57.6%, Japanese Yen 13.6%, Great Britain Pound 11.9%, Canadian Dollar 9.1%, Swedish Krona 4.2% and Swiss Franc 3.6%. The US Dollar Index is best used as an indicator of trends in the currency markets.
However, the US Dollar Index is not as good a trading vehicle as the individual currencies. The best way to trade the index is by using the currency mutual funds. One of the secrets of knowing trading success is understanding what kind of a person you are.
Spot Currency trading where you trade the spot currency market is not for the weak nerved. Suppose you are afraid of taking a coffee or bathroom break for the fear the market will move against you and in a blink of an eye you will end up with a margin call. In such a case you need to invest in currency mutual funds based on US Dollar Index and relax.
By trading these currency mutual funds you are taking away the big part of the risk involved in trading currencies. If you check the dollar index a few times during the day, then you have a pretty good idea as to how your fund is going to close at the end of the day. - 23199
The Federal Reserve Board had introduced the US Dollar Index in 2003. The index is the result of the Smithsonian Agreement that had replaced the Bretton Woods Agreement. The US Dollar Index is similar to the Feds Dollar Index which is a trade weighted index. The Fed gives value to each individual currency in the index based on how much it trades with the US.
However, the value of US Dollar Index and the Feds Dollar Index is different and it should not be confused with one another. The futures contract expires on March, June, September and December. The minimum tick on the US Dollar Index is 0.1 and equals $10.
The overall value of the contract on the index is 1,000 times the value of the index in dollars. Delivery is physical. It means that you receive dollars based on the value of the index on the second business day prior to the third Wednesday during the month of the expiring contract.
Delivery day is the third Wednesday of the contract month. No trading limits are placed on the US Dollar Index. Trading hours are from 8.05 AM to 3:00 PM with the overnight trading from 7 PM to 10 PM.
The US Dollar Index was modified at the inception of the Euro. It is weighted in a way thats similar to the Feds trade weighted index as follows: Euro 57.6%, Japanese Yen 13.6%, Great Britain Pound 11.9%, Canadian Dollar 9.1%, Swedish Krona 4.2% and Swiss Franc 3.6%. The US Dollar Index is best used as an indicator of trends in the currency markets.
However, the US Dollar Index is not as good a trading vehicle as the individual currencies. The best way to trade the index is by using the currency mutual funds. One of the secrets of knowing trading success is understanding what kind of a person you are.
Spot Currency trading where you trade the spot currency market is not for the weak nerved. Suppose you are afraid of taking a coffee or bathroom break for the fear the market will move against you and in a blink of an eye you will end up with a margin call. In such a case you need to invest in currency mutual funds based on US Dollar Index and relax.
By trading these currency mutual funds you are taking away the big part of the risk involved in trading currencies. If you check the dollar index a few times during the day, then you have a pretty good idea as to how your fund is going to close at the end of the day. - 23199
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Know Swing Trading. Learn Forex Trading!
posted by X - Men @ 1:17 AM
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