Comments on: Why isn’t there a forex currency index? http://www.theforextradingblog.com/forex-option-trading/why-isnt-there-a-forex-currency-index Keep you up to date on Forex Trading Fri, 12 Mar 2010 14:34:37 +0000 http://wordpress.org/?v=2.5.1 By: Jerry http://www.theforextradingblog.com/forex-option-trading/why-isnt-there-a-forex-currency-index#comment-3022 Jerry Tue, 18 Nov 2008 10:08:59 +0000 http://www.theforextradingblog.com/forex-option-trading/why-isnt-there-a-forex-currency-index#comment-3022 As function of how the currency exchange market works it is not possible to make an "index" of foreign currencies as the value of each currency is relative to the currency it is compared to. This means that the same Euro for example may be worth $1.27 US dollars but at the same it it is worth, 122.40 Yen, and 0.8133 British Pounds. Thus a single index for a world wide market is extremely difficult and would in fact be useless, as there are too many currencies world wide to deal with. Further, which currencies would be chosen to make up the index and on what basis, and by who's decision, under the authority of which country? There is however an "index" of the U.S. Dollar which measures the dollar's value against a "basket" of other currencies. The ticker symbol is NYBOT:DX. This allows you to see the strength of the US currency compared to a weighted geometric mean of the Japanese Yen, Euro, Great British Pound, Swiss Franc, Canadian Dollar, and the Swedish Krona. I believe there are foreign currency brokers in the US that allow you to trade this fund as you would any other stock or index.<br><b>References : </b><br>New York Board of Trade As function of how the currency exchange market works it is not possible to make an “index” of foreign currencies as the value of each currency is relative to the currency it is compared to. This means that the same Euro for example may be worth $1.27 US dollars but at the same it it is worth, 122.40 Yen, and 0.8133 British Pounds. Thus a single index for a world wide market is extremely difficult and would in fact be useless, as there are too many currencies world wide to deal with. Further, which currencies would be chosen to make up the index and on what basis, and by who’s decision, under the authority of which country?

There is however an “index” of the U.S. Dollar which measures the dollar’s value against a “basket” of other currencies. The ticker symbol is NYBOT:DX. This allows you to see the strength of the US currency compared to a weighted geometric mean of the Japanese Yen, Euro, Great British Pound, Swiss Franc, Canadian Dollar, and the Swedish Krona.

I believe there are foreign currency brokers in the US that allow you to trade this fund as you would any other stock or index.
References :
New York Board of Trade

]]> By: what? http://www.theforextradingblog.com/forex-option-trading/why-isnt-there-a-forex-currency-index#comment-3021 what? Tue, 18 Nov 2008 09:41:59 +0000 http://www.theforextradingblog.com/forex-option-trading/why-isnt-there-a-forex-currency-index#comment-3021 creating an index is pretty well meaningless and impossible. forex is a zero-sum game, which means that the index would always be trading at 100. you would have to hold one currency separate to even compile the index, at which point it would do nothing more than the ETFs UUP/UDN.<br><b>References : </b><br> creating an index is pretty well meaningless and impossible.

forex is a zero-sum game, which means that the index would always be trading at 100.

you would have to hold one currency separate to even compile the index, at which point it would do nothing more than the ETFs UUP/UDN.
References :

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