A noob question about currencies/forex

Discussion in 'Trading' started by TGpop, Nov 5, 2009.

  1. TGpop


    I don't understand when people say that shorting a , for example, euro future is the same as going short EUR/USD, they say its the exact same chart pretty much.

    i don't get it, how are spot forex exchange rates actually created?

    because surely, EUR/USD is a pair, and is showing the euro's performance against just the USD, whereas the futures of euro are just of th euro, and not compared with any pair...?
  2. There has to be something to compare to...whether it's the Dollar or the Yen...the euro by itself is just buying power. You have to have an "exchange rate" to determine currency pricing.

    The DXY has multiple (basket) components to determine USD valuation. Check: http://www.babypips.com/school/the_usdx_components.html


  3. TGpop


    so the spot exchange rate, its just like a mix of the euro and the dollar itself? i thought it was based on supply and demand for dallrs and euros, etc
  4. TGpop


    o my, thank you, i did not know this.
  5. Even "supply and demand" has to be paid for...either in gold or other currencies, right?

  6. TGpop


    so it's kind of the same,but not quite?
  7. TGpop


    right, you can buy futures of the dollar index yes?

    the spot currency pairs /exchange rates are decided by supply and demand?

    but the dollar index itself is decided by the geometric weighting thingy?

    and every currency has an index?
  8. What do you mean "just of the euro"?

    Did you read http://www.cmegroup.com/trading/fx/fx/euro-fx_contract_specifications.html?

    It is clearly stated there that you trade "EUR/USD futures".

    Same for all the other liquid CME futures (all GBP/USD, AUD/USD etc.).

    You never compare a currency with a pair, just with another currency.
  9. TGpop


    o $hit, big noob mistake.

    so you cant tradet he USDX by futures, well you can trade an etf of it.

    you can trade the futures of it. damn.