NexusFi: Find Your Edge


Home Menu

 





The Dollar Index


Discussion in Emini and Emicro Index

Updated
      Top Posters
    1. looks_one Zondor with 6 posts (15 thanks)
    2. looks_two cpi65 with 5 posts (2 thanks)
    3. looks_3 Lornz with 2 posts (0 thanks)
    4. looks_4 Obelixtrader with 2 posts (4 thanks)
      Best Posters
    1. looks_one Zondor with 2.5 thanks per post
    2. looks_two Obelixtrader with 2 thanks per post
    3. looks_3 puma with 1 thanks per post
    4. looks_4 cpi65 with 0.4 thanks per post
    1. trending_up 12,589 views
    2. thumb_up 24 thanks given
    3. group 7 followers
    1. forum 21 posts
    2. attach_file 2 attachments




 
Search this Thread

The Dollar Index

  #11 (permalink)
 cpi65 
UK
 
Experience: None
Platform: -
Posts: 154 since Aug 2010
Thanks Given: 12
Thanks Received: 75

I would be cautious of using the dollar index like this. There are quite a few similar indices you can use; the CRb as I mentioned, the 10yr yield, smallc caps vs. mid caps, the VIX, STIR rates and forward curves, you can go on and on.

the point is that nothing lasts forever. You can have instances when equities and the dollar will go in the same direction, and instances when they dont. It all depends on the reasons behind the move.

Reply With Quote
Thanked by:

Can you help answer these questions
from other members on NexusFi?
Better Renko Gaps
The Elite Circle
My NT8 Volume Profile Split by Asian/Euro/Open
NinjaTrader
ZombieSqueeze
Platforms and Indicators
Exit Strategy
NinjaTrader
New Micros: Ultra 10-Year & Ultra T-Bond -- Live Now
Treasury Notes and Bonds
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Get funded firms 2023/2024 - Any recommendations or word …
61 thanks
Funded Trader platforms
38 thanks
NexusFi site changelog and issues/problem reporting
26 thanks
GFIs1 1 DAX trade per day journal
19 thanks
The Program
18 thanks
  #12 (permalink)
 
Zondor's Avatar
 Zondor 
Portland Oregon, United States
 
Experience: Beginner
Platform: Ninjatrader®
Broker: CQG, Kinetick
Trading: Gameplay Klownbine® Trading of Globex
Posts: 1,333 since Jul 2009
Thanks Given: 1,246
Thanks Received: 2,731

OK, it works now, but nothing lasts forever. So I promise not to use it anymore, and I hope nobody else does, either.

A Blinking Idiot & the Banking System | zero hedge

Quoting 
Lee: Because commodities, such as oil, are traded in Dollars. Commodities are basically a cash substitute at this point. The players don’t want to hold Dollars because the Fed is trashing the Dollar. If you’re a trader outside the U.S., and your native currency is the yen, for example, and you want to buy oil or gold futures, you need to sell Dollars in exchange for the gold or oil futures contracts you’re buying. So your action of buying the commodities in Dollars is in effect creating a short position in the Dollar.
So if commodities collapse and you’re forced to sell your positions, you’ll reverse that short position in the Dollar - trading the commodities back for Dollars. That creates demand for the Dollar. That’s why commodities and the Dollar definitely do have an inverse relationship.
....
Ilene: Why do commodities and the Dollar have a more persistent relationship than the Dollar and the stock market, for which there is an inverse relationship now, but this is not always the case?
Lee: The Dollar/stock market inverse relationship is a correlation due to a common cause - essentially the actions of the Fed. It’s not a cause and effect relationship.
...
Elliott: As you say it is kabuki theater, and as Phil says, we don’t care if the markets are rigged, we just need to know HOW the market is rigged so we can place our bets correctly.


Follow me on Twitter Visit my NexusFi Trade Journal Started this thread Reply With Quote
Thanked by:
  #13 (permalink)
 cpi65 
UK
 
Experience: None
Platform: -
Posts: 154 since Aug 2010
Thanks Given: 12
Thanks Received: 75


Hi Zondor,

I'm not really sure what you're saying? What I mean to be saying is that relationships like this (i.e. dollar up stocks up, or, say, bonds down stocks up, or whatever) are great but only as long as they are appropriate. What's important I think is to have a handle on what the themes are in the market at the time. There are countless examples when X going up meant that Y was going up too, until the environment changed and X and Y moved in opposite directions.

Some examples of how I use this

* I trade out of london, and often the first things I look at are the currencies - say the flavour of the month is chinese growth, the aussie has the chance to go bid before the mining stocks do - or, the euro has a chance to fall before the bank stocks do. When there is a theme like this, it's OK to be looking at other asset classes to get a handle on the sentiment, provided you are looking at the right things. Or peripheral bond spreads, or whatever.

* another example would be crude. when it was trading in the 120s and 130s, Oil and Equities had a negative relationship. as crude went higher, stocks would dip on rising costs and lower revenues. Fast forward a coule of years, and crude would rise as stocks would rise, on increased risk appetite and optimisim about the US economy recovering.

Look, all I'm saying is dont get married to an "X does this, Y does that" approach. At some point it will bite you in the ass.

Reply With Quote
Thanked by:
  #14 (permalink)
 
Zondor's Avatar
 Zondor 
Portland Oregon, United States
 
Experience: Beginner
Platform: Ninjatrader®
Broker: CQG, Kinetick
Trading: Gameplay Klownbine® Trading of Globex
Posts: 1,333 since Jul 2009
Thanks Given: 1,246
Thanks Received: 2,731


Quoting 
I'm not really sure what you're saying? What I mean to be saying is that relationships like this (i.e. dollar up stocks up, or, say, bonds down stocks up, or whatever) are great but only as long as they are appropriate. What's important I think is to have a handle on what the themes are in the market at the time.

I completely agree! The correlation between dollar weakness and risk assets is something that works only as a direct consequence of Fed policies. The market is rigged, so we need to understand HOW it is rigged.

These lockstep correlations are really pretty new. It seems that everything is correlated. That's why so many hedge funds following neutral methodologies have gone out of business. For an example of how ridiculous this has become, it's now helps to watch the NYSE TICK to trade the CL crude oil futures. When/if there is ever a return to normally functioning markets, these nutty correlations will disappear.

Follow me on Twitter Visit my NexusFi Trade Journal Started this thread Reply With Quote
  #15 (permalink)
 cpi65 
UK
 
Experience: None
Platform: -
Posts: 154 since Aug 2010
Thanks Given: 12
Thanks Received: 75

OK, we agree on the idea

sorry but I disagree that this happens solely because of a FED policy though (I mean, that might be true now, but not all the time across all realtionships). What I mean is sometimes the FED isn't "rigging" the market, but these relationships still exist.

Reply With Quote
  #16 (permalink)
 
franjah64's Avatar
 franjah64 
Bogotá - Colombia
 
Experience: Beginner
Platform: NinjaTrader
Broker: AMP/CQG
Trading: ES/6E
Posts: 10 since Jun 2011
Thanks Given: 77
Thanks Received: 3

Hi,
Thinkorswin (by Ameritrade) has /DX available for free...demo account no expires.

Reply With Quote
Thanked by:
  #17 (permalink)
 
Lornz's Avatar
 Lornz 
Oslo, Norway
 
Experience: Advanced
Platform: CQG, Excel
Trading: CL
Posts: 1,193 since Apr 2010


cpi65 View Post
Hi Zondor,

I'm not really sure what you're saying? What I mean to be saying is that relationships like this (i.e. dollar up stocks up, or, say, bonds down stocks up, or whatever) are great but only as long as they are appropriate. What's important I think is to have a handle on what the themes are in the market at the time. There are countless examples when X going up meant that Y was going up too, until the environment changed and X and Y moved in opposite directions.

Some examples of how I use this

* I trade out of london, and often the first things I look at are the currencies - say the flavour of the month is chinese growth, the aussie has the chance to go bid before the mining stocks do - or, the euro has a chance to fall before the bank stocks do. When there is a theme like this, it's OK to be looking at other asset classes to get a handle on the sentiment, provided you are looking at the right things. Or peripheral bond spreads, or whatever.

* another example would be crude. when it was trading in the 120s and 130s, Oil and Equities had a negative relationship. as crude went higher, stocks would dip on rising costs and lower revenues. Fast forward a coule of years, and crude would rise as stocks would rise, on increased risk appetite and optimisim about the US economy recovering.

Look, all I'm saying is dont get married to an "X does this, Y does that" approach. At some point it will bite you in the ass.


Thank you!

It's nice to see someone with a sound approach....

Visit my NexusFi Trade Journal Reply With Quote
  #18 (permalink)
 
KahunaDog's Avatar
 KahunaDog 
Hawaii at the beach
 
Experience: Beginner
Platform: Nt8, MotiveWave, TOS
Broker: S5
Trading: ES, ZB fine alcohol and muscle cars
Posts: 549 since Apr 2013
Thanks Given: 1,168
Thanks Received: 412

Now that ICE charges(WTH?)
what are you guys doing to track the USD ?

dxy was my go to... now poop

Visit my NexusFi Trade Journal Reply With Quote
  #19 (permalink)
 Obelixtrader 
Slovakia
 
Experience: Intermediate
Platform: Ninjatrader 8
Broker: Interactive Brokers,Tastytrade,Birdwingo
Trading: K200M,KOSDQ150,US stock option
Posts: 220 since Aug 2009
Thanks Given: 116
Thanks Received: 109


KahunaDog View Post
Now that ICE charges(WTH?)
what are you guys doing to track the USD ?

dxy was my go to... now poop

Tommorow start on CMEGROUP-CME Bloomberg Dollar Spot Index Futures (BDI)

Reply With Quote
Thanked by:
  #20 (permalink)
 
puma's Avatar
 puma 
zurich
 
Experience: Advanced
Platform: Sierra ahRrrr CQG ...
Trading: Bund, ES, ...
Posts: 964 since Aug 2010
Thanks Given: 7,273
Thanks Received: 1,507



Obelixtrader View Post
Tommorow start on CMEGROUP-CME Bloomberg Dollar Spot Index Futures (BDI)

must kill the ICE


Follow me on Twitter Reply With Quote
Thanked by:




Last Updated on March 31, 2016


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts