Basket Of USD Shorts

DEFINITION of 'Basket Of USD Shorts'

A forex trading strategy that involves the sale of the U.S. dollar against a group of currencies, rather than against a single currency. The currency group involved in such a trading strategy is called a "basket."

BREAKING DOWN 'Basket Of USD Shorts'

This strategy would typically be employed by traders who are bearish on the U.S. dollar, and would prefer to have a short trading position on it. The basic rationale for using a basket to short the U.S. dollar is risk mitigation through diversification. In the event that the U.S. dollar strengthens appreciably, given that it may appreciate at differing rates against various currencies, the loss on a short position may be significantly lower if multiple currencies are involved in it, as opposed to a short position using a single currency.

RELATED TERMS
  1. Currency Basket

    A selected group of currencies in which the weighted average ...
  2. Reciprocal Currency

    In the foreign exchange market, a currency pair that involves ...
  3. Diversified Carry Basket

    A forex trading strategy in which multiple carry trades are conducted ...
  4. Currency Pair

    The quotation and pricing structure of the currencies traded ...
  5. Basket

    A single unit of at least 15 stocks that are used in program ...
  6. Funding Currency

    The currency being exchanged in a currency carry trade. A funding ...
Related Articles
  1. Trading

    Forex Tutorial: Reading a Forex Quote and Understanding the Jargon

    One of the biggest sources of confusion for those new to the currency market is the standard for quoting currencies. In this section, we'll go over currency quotations and how they work in ...
  2. Trading

    Drastic Currency Changes: What's The Cause?

    Currency fluctuations often defy logic. Learn the trends and factors that result in these movements.
  3. Trading

    The Forex Market: Who Trades Currency And Why

    The forex market has a lot of unique attributes that may come as a surprise for new traders.
  4. ETFs & Mutual Funds

    USDU: WisdomTree Bloomberg US Dllr Bullish ETF

    Explore an analysis of information on the WisdomTree Bloomberg U.S. Dollar Bullish Fund, a currency ETF that tracks the overall performance of the U.S. dollar.
  5. Trading

    Forex Trading: A Beginner's Guide

    Learn about the forex market and some beginner trading strategies to get started.
  6. Trading

    4 Of The Most Popular Traded Currencies

    Every day, trillions of dollars trade in the forex market. Here are a few of the most popular currencies, and some characteristics for each.
  7. Trading

    Top 5 Reasons To Invest In Currencies

    Here's why you should get into the forex market.
  8. Trading

    The Basics Of Currency Trading

    Trading in the currency market isn't easy. We tell you what you need to know before starting.
  9. ETFs & Mutual Funds

    Profit From Forex With Currency ETFs

    There's always a bull market somewhere - and now you can find it with currency ETFs.
  10. Trading

    Top 5 Hardest-Hit Currencies

    The value of a country's currency is dependent on many factors that will cause it to fluctuate, relative to other world currencies.
RELATED FAQS
  1. How do you make money trading money?

    Investors can trade almost any currency in the world. Investors, as individuals, countries, and corporations, may trade in ... Read Answer >>
  2. Why is the U.S. dollar shown on the top of some currency pairs and on the bottom ...

    All currencies are traded in pairs. The first currency in the pair is called the base currency while the second is called ... Read Answer >>
  3. How can I trade in cross currency pairs if my forex account is denominated in U.S. ...

    The forex market allows individuals to trade on nearly all of the currencies in the world. However, most of the trading is ... Read Answer >>
  4. Is there a buy-and-hold strategy in forex, or is the only way to make money by trading?

    Typically there are different ways to trade in most markets. Traders have been classified into three groups, primarily based ... Read Answer >>
  5. Why is currency always quoted in pairs?

    When reading currency quotes, you have probably noticed that there is only a single quote for a pair of currencies. Currency ... Read Answer >>
  6. Why isn't the EUR/USD currency pair quoted as USD/EUR?

    In a currency pair, the first currency in the pair is called the base currency and the second is called the quote currency. ... Read Answer >>
Hot Definitions
  1. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  2. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  3. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  4. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  5. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
  6. Security

    A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship ...
Trading Center