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. Dollar Rate

    The exchange rate of a currency against the U.S. dollar (USD). ...
  4. Diversified Carry Basket

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

    The quotation and pricing structure of the currencies traded ...
  6. Funding Currency

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

    Making A Play With Currency ETFs

    For investors looking for alternatives for their portfolios, currency remains a compelling addition. The exchange-traded fund boom has made it easy for regular retail investors to add currencies ...
  2. Forex Education

    Drastic Currency Changes: What's The Cause?

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

    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. Forex Education

    Popular Forex Currencies

    Learn about the most traded currencies and the strategies used to trade them.
  5. Forex Education

    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.
  6. Forex Education

    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.
  7. Options & Futures

    A Primer On The Forex Market

    Moving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers.
  8. Forex Education

    Forex Tutorial: Currency Trading Summary

    While this online forex tutorial only represents a fraction of all there is to know about forex trading, we hope that you've gained some insight into this topic. We also encourage those of you ...
  9. Stock Analysis

    6 ETFs You Can Use To Bet Against The U.S. Dollar

    The world is losing faith in the U.S. dollar, but these ETFs can help investors protect their portfolios.
  10. Forex Education

    Forex Currencies: Trading Strategies

    By Brian PerryFor beginning investors, there are a variety of currency trading strategies available. However, most strategies fall into two broad categories: hedging and speculating. Hedging ...
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. How do I use a "basket" option?

    A basket option is an option with an underlying asset "basket" of securities, currencies or commodities. Basket options are ... Read Answer >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. What are the most common currency pairs traded in the forex market?

    There are many official currencies that are used all over the world, but there only a handful of currencies that are traded ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center