How To Use Index Dollar Indicator

[cambista]

Hi there,

My question is for a professional and/or experienced forex daytrader:

Could you explain us how can we use the Dollar Index indicator in order to improve trading currencies and where can we find info about it ?

Thanks a lot,

Cambista

[midastrader]

I think USDX is the same as Stock Index, it was calculated for knowing the overall strength of the USD. The USDX movement is similar to the EUR.

[mishak]

USD index is based on the basket representing the structure of the USA foreign trade with other countries. So, it is just a proxy for the overall strength of the USD.

It is made up of the Euro (57.6%), Japanese Yen (13.6%), the U.K. Pound (11.90%), the Canadian Dollar (9.10%), the Swedish Krona (4.2%) and the Swiss Franc (3.6%).

[cambista]

Thank you guys for your answer, you explain us how the dollar Index is based, but we would like to know how to use it (for trading forex) and where to find the info about it....

Thanks again...!

Cambista

[mishak]

Indices are traded on exchanges.

Futures and options on US dollar index are traded on NYBOT. Check http://www.nybot.com/specs/dx.htm

Strictly speaking, it is NOT a part of forex market.
Like any derivative (read secondary), it highly depends on spot prices of the underlying asset. The basket of currencies.

It helps to hedge currency risk for international import/export USA trading or visualize this basket behaviour.

[fxmoneytrends]

The first thing I look at each morning is the dollar index. I then compare that to the USD/CHF and then look at the EUR/USD as that is a benchmark.

For instance. Knowing that USD index was approaching major support allowed us to be big buyers of the dollar in January.

cheers,

Jes Black
www.fxmoneytrends.com

[cambista]

[quote=fxmoneytrends]The first thing I look at each morning is the dollar index. I then compare that to the USD/CHF and then look at the EUR/USD as that is a benchmark.

For instance. Knowing that USD index was approaching major support allowed us to be big buyers of the dollar in January.

cheers,

Jes Black

Hello Jes Black,

Thanks a lot for your answer, I saw you last february at the Expo Trader, New York, I really like your talking about Forex...!

You said: "The first thing I look at each morning is the dollar index"

Could you please tell us where to find that info ? Could you name the web-site that you look each morning for the dollar index please ?

Best regards,

Cambista

[fxmoneytrends]

http://www.futuresource.com/charts/c...OW&b=CANDLE&st=

This is what I look at each morning

Jes