What is 'Trading Dollars'

Trading dollars is a slang term describing a company that is spending just as much money as it is making on a product that it develops. Trading dollars refers to a break-even business investment. The company is essentially trading its expenses for an equal amount of return, thus the name "trading dollars," as in, "trading dollars for dollars."

BREAKING DOWN 'Trading Dollars'

Trading dollars is a situation that typically describes a waste of effort and resources. While the venture did not lose money, the capital could have been allocated to a profitable venture.

In this sense, any event that results in trading dollars can be viewed as a loss rather than just a break-even event.

For example, a gold exploration company that spends $10 million to mine $10 million worth of gold can be said to be trading dollars. Likewise, an oil company that invests $5 million to extract only $5 million worth of oil is trading dollars.

These business ventures are zero-sum games, where the business's gains are exactly balanced by its losses (or expenses) in product development or in a particular business investment.

Another Definition of Trading Dollars

The idea of sinking money into projects with flat ROI is clearly an unappealing one for most businesses. But another take on the concept of trading dollars was explored in a 2016 Wall Street Journal feature.

In Zimbabwe, "a U.S. dollar is no longer worth a U.S. dollar," according to the article. "Money changers charge $102 in small notes for a $100 bill."

The odd scenario of trading dollars for other dollars at a premium was caused by the devaluation and concurrent appreciation of the U.S. currency against itself, the paper explained, which was a consequence of a Zimbabwe's economic crisis.

The country had begun using U.S. dollar in 2009, as a substitute for its own failed currency. The hope was that it "would bring stability after years of hyperinflation that added 12 zeros to its currency," according to the Wall Street Journal. But a collapsing export market and expatriated dollars meant that "the greenback has become a scarce commodity."

With the expectation that then-President Robert Mugabe would revive the Zimbabwe dollar as currency, American dollars in the bank were suddenly worth less than they were in cash. So as people began hoarding dollars or sending them abroad, the value of the remaining U.S. cash currency only grew.


  1. Breakeven Point (BEP)

    The breakeven point on a trade is when there is no gain or loss, ...
  2. Break-Even Analysis

    An analysis to determine the point at which revenue received ...
  3. Constant Dollar

    A constant dollar is an adjusted value of currency used to compare ...
  4. Weak Dollar

    A weak dollar is a sustained period of depreciation in the United ...
  5. Dollar Bull

    A dollar bull is an investor or speculator who is optimistic ...
  6. Venture Capital

    Venture Capital is money provided by investors to startup firms ...
Related Articles
  1. Trading

    Play Foreign Currencies Against The U.S. Dollar And Win

    Don't panic when the dollar drops. Learn to exploit the greenback's decline and profit from it.
  2. Trading

    How U.S. firms benefit when the dollar falls

    When the dollar is weak or falls, smart investors will benefit from investments in multinational companies.
  3. Investing

    Dollar Poised for 13% Drop That Could Boost Stocks

    Should the dollar weaken it should not be viewed as a negative, but a positive.
  4. Small Business

    Does Your Startup Need Venture Capital Money?

    Venture capital funding provides capital to grow a business. However, entrepreneurs will also lose some control over business decisions.
  5. Trading

    The U.S. Dollar's Unofficial Status as World Currency

    Discover how and why the U.S. dollar emerged as official currency in many foreign countries.
  6. Investing

    How Social Venture Capital Is Changing the World

    Learn what social venture capital is and the ways in which it differs from traditional venture capital. Identify two leading social venture capital firms.
  7. Investing

    4 Stocks Poised to Fall as the Dollar Rebounds

    The weak dollar has aided McDonald's, Nike, J&J and Under Armour, but it soon may be a liability.
  8. Investing

    PFE Not the Only Pharma Co. Hurt by Strong Dollar

    Today the Financial Times reported that Pfizer (and by implication other pharmaceutical companies) may be impacted by a strong dollar.
  9. Small Business

    Fed Raising Rates Affects Startup Funding

    With interest rates having nowhere else to go but up, the Fed’s impending interest rate raise will likely begin to reverse the flow of startup funding.
  1. How is venture capital regulated by the government?

    Learn about some of the ways in which the U.S. government and the Securities and Exchange Commission regulate venture capital. Read Answer >>
  2. What are the primary disadvantages of forming a joint venture?

    Learn the disadvantages to forming and maintaining a joint venture partnership, including factors business owners should ... Read Answer >>
  3. Why is the British pound / U.S. dollar currency pair known as "trading the cable"?

    The British pound / U.S. dollar currency pair is one of the oldest and most widely-traded currency pairs in the world. The ... Read Answer >>
Hot Definitions
  1. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  2. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  3. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  4. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  5. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  6. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
Trading Center