How to hedge the $USD?

Discussion in 'Trading' started by drukes1234, Sep 20, 2007.

  1. Daal

    Daal

    with forex you can choose the proper amount in case its not an exact number of the futures contract
    think of this way if you hold $100,000 and dont live in the US your taking huge position in the fx market without any reasoning behind the 'trade'. by buying cad futures(or forex) for an equivalent amound yor merely offseting that 'gamble'. you never win or lose due exchange rate movements, you will stay net neutral.(there is the cost of carry a short usd but bernanke is working on this one)
     
    #11     Sep 21, 2007
  2. The way i would look at is, with your $200K trading account in the US, you are effectively :

    LONG 2 lots USDCAD spot currency

    To hedge, just put the opposite trade on with an FX broker i.e SHORT 2 lots of USDCAD.

    Any further weakness in your US$ trading account will be off-set by the money you make with your hedge.
    If the US$ rebounds and strengthens, your hedge position will lose money but your trading account will be worth more CAD.
     
    #12     Sep 21, 2007
  3. Halal can I do this trade with Interactive Brokers?
     
    #13     Sep 21, 2007
  4. timbo

    timbo

    Sorry, but why hedge? Do you not see the potential?
     
    #14     Sep 21, 2007
  5. Daal

    Daal

    I believe you need to type cadusd or cad at TWS then choose IDEALPRO, then put a trade on for the right amount
     
    #15     Sep 21, 2007
  6. I can go ahead and short the exact amount of USD/CAD in interactive brokers but I will be charged interest every day.... won't that eliminate much of the hedge?
     
    #16     Sep 21, 2007
  7. If the previous posts about $1.50 for every $100k short is true then that's a very small price to pay for this hedge. I don't understand why you say the leverage would land out hurting though?
     
    #17     Sep 21, 2007
  8. timbo

    timbo

    Hedging payoff is stochastic.
     
    #18     Sep 21, 2007
  9. And my last question (I hope) is, let's say I short $35k USD/CAD... does that take away $35k of my buying power?
     
    #19     Sep 21, 2007
  10. Could you please explain this - I don't know much about how one goes about hedging (I assume this is with futures contracts?), so I'm curious as well.
     
    #20     Sep 24, 2007