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.

  1. Basket

    A single unit of at least 15 stocks that are used in program ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments ...
  3. Short (or Short Position)

    A short position is the sale of a borrowed security, commodity ...
  4. Long (or Long Position)

    1. The buying of a security such as a stock, commodity or currency, ...
  5. Currency Basket

    A selected group of currencies in which the weighted average ...
  6. Forex Spread Betting

    A category of spread betting that involves taking a bet on the ...
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