Learn to Short Dollar

Learn to Short Dollar is a major constraint on growth at home and abroad, as countries that borrow in dollars have to increase their debt-service payments when the currency rises. This is not a new phenomenon: the USD has had three major cycles of strength and weakness in the past 30 years, each of which caused a global short squeeze that dragged the rest of the world into recession until it was resolved.

In order to profit from a falling USD, traders can either trade currency pairs on Forex, or alternatively buy inverse ETFs and leveraged CFDs that offer direct exposure to a declining USD. However, trading on leverage means that you’re speculating on something that you don’t actually own, and you can make losses as well as profits (profits and losses from trading forex may exceed your initial deposit).

How to Short the Dollar

The concept of shorting the dollar is fairly simple: when you sell a pair of currencies – for example EUR/USD – you are betting against the value of the euro increasing – ie you think it will fall. This is known as short-selling’ or ‘going short’, and if you are correct you will make a profit from this drop in the currency’s market price. The same is true of every other currency pair that you see on the screen – in fact, all forex trading involves selling one currency in order to buy another.

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