How to hedge the USD?

Discussion in 'Trading' started by tonyf, Aug 28, 2022.

  1. Assume you will sell USD1m on December 19, 2022 against GBP and
    assume GBP Dec19'22 Fut bid/ask: 1.1724/1.1726 (multiplier 62500).
    The purchase of the above futures contract is equivalent of buying 62500 GBP and selling 62500 x 1.1726 USD on Dec 19 2022. Given that 1000000 / 62500 / 1.1726 = 13.6 you need to buy 14 contracts.
     
    #11     Aug 29, 2022
    M.W. likes this.
  2. maxinger

    maxinger

    Simply trade US dollar futures from ICE US Exchange.
    The symbol is DX.

    long it or short it as you wish.
     
    #12     Aug 29, 2022
  3. Trader Curt

    Trader Curt

    Your best bet would be to put all your money in Bitcoin since it sounds like you dont know what you're doing
     
    #13     Aug 29, 2022
  4. M.W.

    M.W.

    Those are implementation details and would depend on your specific timing and case. Perhaps first start with a reputable broker. But as others said you might just do it via fx futures. Make sure you trade the correct side as they are unconventionally defined (usdeur instead of the industry standard eurusd)

     
    #14     Aug 29, 2022
  5. Similar situation here too, FWIW. I spend roughly 65% CAD, 25% EUR, 10% USD in a typical year.

    I just use the cash markets. I keep my net currency roughly in proportion to how I spend it, buy/sell in cash markets to rebalance occasionally (a few times a year, usually) and don't spend too much time worrying about it.

    When I'm agnostic toward the future directions of currencies, I assume their movements won't impact my portfolio too much in the long term anyway (just noise). When I have a tradeable opinion on the direction a currency will move, then of course I trade it (usually using futures or options), but that's off-topic because it's speculative, not hedging. This would be different for someone who doesn't include currencies in their universe of assets to predict and trade (maybe they would care more about hedging because they wouldn't be "on alert" for big moves.)

    Note that I rarely come close to having to worry about margin, so I don't have any constraints there. Someone else's situation could be different. Also, I usually have a considerable number of shorts balancing my longs, which helps, although not always.

    I also hold some options-hedged crypto positions (speculative), but not enough to care if I lose it all (yet enough to be happy if my models work.) Unlike most people in 2022, I do occasionally spend crypto to buy things and I do plan to do more of that in the future as opportunities permit. I'm already "over-allocated" to crypto from a hedging perspective (because it's speculative), but 10 years from now my spendings ratios may change considerably. We'll see.
     
    #15     Aug 29, 2022
    M.W. likes this.
  6. …you can change your base currency in IB…
     
    #16     Aug 30, 2022