USD Strength forex portfolio

This formula is taking the negative of three currency pairs: GBP/USD, AUD/USD, EUR/USD and adding them to two other currency pairs: USD/JPY, USD/CHF. The result is then divided by 5 to find the average. This could be used as a strategy to determine a portfolio’s average value in currency trading.

Each currency pair represents the cost of one unit of the base currency in terms of the quote currency. For example, if GBP/USD is 1.3, it means 1 British pound is equivalent to 1.3 US dollars.

In this formula, the negative sign before GBP/USD, AUD/USD, and EUR/USD suggests a short position or selling of the base currency (i.e., GBP, AUD, EUR) for US dollars. For USD/JPY and USD/CHF, it implies a long position or buying of US dollars by selling Japanese Yen and Swiss Francs respectively.

Here’s a breakdown:

• -GBP/USD: This signifies a short position on the British pound relative to the US dollar.
• -AUD/USD: This indicates a short position on the Australian dollar relative to the US dollar.
• -EUR/USD: This points to a short position on the euro relative to the US dollar.
• USD/JPY: This signifies a long position on the US dollar relative to the Japanese yen.
• USD/CHF: This indicates a long position on the US dollar relative to the Swiss franc.

By adding these positions together and dividing by 5, the formula is finding the average of these five positions. This could be part of a broader trading strategy in the forex market. The average might be used as a benchmark or as a method to manage risk by diversifying across multiple currency pairs.

Share this