Dollar Index Futures
Traders who are familiar and comfortable with futures trading can directly trade the U.S. dollar index futures contract, symbol USDX. Futures trading allows trades with or against the index with the same contract, by either going long or short to open a trade. The futures contract trades directly against the value of the U.S. dollar index which is widely reported by the financial press and website.
The USDX contract is worth $1,000 times the value of the dollar index. In December, 2010 one contract was worth about $80,000 with the index at 80. The tick size for USDX is half a cent, which works out to $5.00 per contract. The required margin deposit is approximately $2,000.
Trading the U.S. dollar index future provides a 20 to 1 leverage ratio. If the index changes value by one point, one USDX contract will show a profit or loss of $1,000. Note that the trader who made a bet in the wrong direction would have lost half of her margin deposit and would be required to have on deposit or add additional money in the trading account to keep the trade open.
For more tips and strategies, be sure to check out the other items in Bright Hub's Collection of Forex Trading Guides.