Fighting against low dollar

Hi, fellow non-american traders: What's the best fight against falling profits when dollar collapes against Euro as in this times?


Lojze

 

Hedge your USD exposure with currency futures or spot FX with a FX broker such as FXCM.

Alternatively you could buy gold or silver as a less perfect hedge.

 

Help me, what do you mean with "spot FX" and FXCM.


Lojze

 

Currencies are traded on a spot basis (settlement 2 days after trade date). Traditionally FX (foreign exchange) trading was only done between banks, and it was not possible for Joe Bloggs to trade currencies with a 5 pip spread.

Now there are online FX brokers, one of which is FXCM (fxcm.com) that allow FX trading with small spreads.

 

Thank you m. But as the spreads are thin, what are the multiples for earnings/loses? Each point how much?


Lojze

 

I think you may be mistaking spreads for margin. Spreads are typically 5 to 7 pips for EUR/USD, CHF/USD, GBP/USD, AUD/USD if trading spot, but 2-5 if trading futures.

Online FX brokers offer 100:1 margin (or more). Overnight margin for currency futures is roughly 30:1 - check out the CME web site for more info such as contract specs and overnight margin requirements.

 

Don't worry about all that. Just buy the same amount of your currency (whatever it is) vs the $US as you have in your $US denominated account and you're hedged.