Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
Login Archives Your Team About Us FAQ
[mmpazkzone name="azk58712-mobile-nav" network="9794" site="307044" id="222451" type="5"]
  • Subscribe
Enter stock ticker or keyword
×
[mmpazkzone name="azk58712-mobile-sticky" network="9794" site="307044" id="222451" type="5"]
Join 100,000+ Like-Minded Investors Today
Twitter
Tags: Currency, currency chart, currency conversion charts, currency converter by date, currency definition, currency history, currency names, currency symbols, currency trading, currency value, current currency exchange rates, current exchange rate calculator, old currency, old currency values, value of old currency

The Best Currency to Short Right Now

By Sean Hyman, Forex Strategist, Money Morning • September 16, 2011

View Comments

Start the conversation

Leave a Reply Click here to cancel reply.

You must be logged in to post a comment.

There's never been a better time to be a short-seller.

Right now stocks are slipping and sliding all over the place, overall trending downward. And it doesn't look like this downtrend is going anywhere soon.

Short-selling can help you protect your overall portfolio when stocks start sliding off the map. Also, you can earn some of the fastest profits from short-selling in "down" markets because markets drop a lot faster than they rise.

We saw that over the last few weeks as the Dow Jones Industrial Average and Standard & Poor's 500 Index erased all their 2011 gains in a couple of days. That's pretty common. In fact, it usually takes an index all year to gain 10% to 20%. Then it can drop as much as 30% in a week.

So if you were able to short stocks during those times, you would make a decent return for a full year within weeks, or even days.

However, it's not always easy to execute short- sells in the stock market - which is why I always look for the best short-selling opportunities in foreign currencies first.

And I just found the ideal short-sell in the f orex market to play as markets fall.

Why to Use the Forex Market for Short-Selling

Many countries are instituting a ban on short-selling some stocks, making it hard to take advantage of market downtrends.

France, Spain, Italy, Belgium, Greece, Turkey and South Korea recently have created some rules against short-selling.

With a short-selling ban in effect, it means even if you believe a stock will drop in value, you can't try to profit off that decline by simply shorting stocks.

Luckily, there will never be any short-selling bans in the f orex market.

You see, currencies are traded in pairs. When you buy the first currency listed in the pair, by default you're also shorting the second currency in the pair. And if you short the first currency listed in the pair, you're automatically buying the second currency.

currency
So if I bought the EUR/USD (the euro vs. the U.S. dollar), I'm buying euros and shorting dollars at the same time. If I shorted EUR/USD, I'm short the euro and long the dollar.

In other words, you're always shorting something. That's why there will never be "short-selling bans" in the spot f orex market.

It also means that with currencies, you can just as easily profit in a "down market" as you can in an "up" market.

Even better - what if there was a "stock-market sensitive" currency in the forex market: As stocks dive, this currency would dive; as stocks rise, it would rise.

Thankfully, that pair does exist.

The Currency Short Sale to Make Now

It's the AUD/USD (Australian dollar vs. the U.S. dollar). Take a look at the accompanying chart .

The AUD/USD has been in an uptrend as long as stocks have. This pair also traded sideways just like stocks did. That caused it to form a chart pattern called a "double-top"
at the same time that stocks did.
currency

Now it's started its downtrend, just like stocks.

Simply shorting this AUD/USD pair is like shorting the Dow or S&P 500. And since it's a currency pair, it's much easier to short-sell it in the f orex market.

It's one of the best hedges you can use to take the sting out of your portfolio as stocks drop. If the Dow really starts falling, your AUD/USD short position will grab even more profits.

Most people don't realize that such a simple solution is out there, but it is. Therefore, take advantage of this time in market history. Simply shorting the Aussie dollar in the f orex market is the easiest way to do that.

[Bio Note: With the outlook for the dollar and the euro growing increasingly bleak, many readers have asked us about currency trading. So we decided to respond by bringing on a new currency expert - Sean Hyman. Hyman is a veteran currency trader with more than 20 years of experience. He also currently serves as Investment Director for World Currency Watch, and editor of Currency Cross Trader. Watch for his columns on currency trading in Money Morning.]

News and Related Story Links:

  • Money Morning:
    Central Bankers' Next Panic Move
  • Money Morning:
    Two Easy Ways to Save Your Wealth From 1970s-Style Stagflation
  • Money Morning:
    How I Made 52% Off the Last Stock Crisis
  • Money Morning:
    The U.S. Government Could Take 14% of Your Wealth... Overnight
  • Money Morning:
    The Secret Way to Profit from the U.S. Debt to China
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us How Money Morning Works FAQs Contact Us Search Article Archive Your Team Text Messaging Terms of Use
TOPICS
AI Investing Best Stocks to Buy Stock Forecasts Stocks to Sell Now Technology Stocks Best REITs to Buy Now IPO Stocks Penny Stocks Dividend Stocks Cryptocurrencies How to Trade Options Best Trades to Make Now Options Trading Strategies Weekly Trade Recommendations Income Investing Guide Retirement Articles Special Investing Reports Meet Our Experts
PREMIUM SERVICES
Money Map Press Home Fast Fortune Club Microcurrency Trader Rocket Wealth Initiative Quantum Data Profits Darknet Alpha Accelerators Brutus Alerts Resource Traders Alliance Rob Roy Trader Long-Term Equity Profits

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information