On the road again! Join tastytrade vets Tom, Liz, and Jenny as they venture out live for the first time in over 2 years at Chicago's Vic Theatre.
tastytrade logo
uploaded image

Simple Ways to Buy Dollars

Jul 23, 2020

By:Frank Kaberna

The US dollar (USD) is in a bit of a downward spiral in recent trade as it closed lower yesterday for the thirteenth time in the last seventeen trading days. More than 6% off its highs of mid-March, USD has fallen at the hands of a few different characters that mainly include the Australian dollar (AUD), pound (GBP), and euro (EUR).

Foreign exchange (FX) markets are nuanced in a way that necessitates movement in one currency come at the expense of opposing movement in one or more other currencies. This can cause confusion in the seemingly simple process of buying or selling US dollars. For example, the Australian dollar has rallied more than 20% against USD since mid-March, while the Japanese yen (JPY) has moved higher by less than 5% against that same USD in the same period.

Simple Ways to Buy Dollars_07-22-20_graphic1.png

Source: dxFeed Index Services (


Traders looking to these traditional FX products for their US dollar exposure have to both invert their assumption, meaning they must sell one of these examples to buy USD, and choose between several paths. Selling the Australian dollar looks like the best value for a long dollar play at the moment, but knowing that it was the weakest of the group to start the year might sway opinions. The Japanese yen looks like the calmest way to trade dollars, but, if the Bank of Japan returns to its active nature of just a few years ago, the yen can move wildly with no regard for USD’s status.


Trading Diversified USD

Futures products such as the Small US Dollar (/SFX) contract let traders act on their USD opinions in a straightforward manner that’s diversified against the group of five currencies above with the addition of the Chinese renminbi (CNY) and Mexican peso (MXN). The intricacies of foreign exchange can be condensed to a single price that moves higher and lower with sentiment in the US dollar.

Simple Ways to Buy Dollars_07-22-20_graphic2.png

Source: dxFeed Index Services (


Adding Some Micro Flavor 

After taking a long or short position on the broad USD market, traders can add an extra layer of creativity and specificity to their FX portfolio by either taking exposure to one of the seven currencies out of the trade or applying an extra emphasis on one of the currencies. /SFX’s small size and simple design makes it easy to expand dollar trades to the world of E-micro foreign exchange futures. 

Traders can use these complementary futures products to hedge long dollar exposure, for example, by buying the weaker Japanese yen future (/MJY) to remove its short bias in the /SFX trade while creating a buy-buy pairs trade between two negatively correlated products. Conversely, those looking to attach an extra, more specific long dollar exposure to their Small US Dollar trade can sell the stronger Australian dollar future (/M6A), but keep in mind that this would add risk, not manage it. The current ratio of /SFX to E-micro foreign exchange futures is 1 unit to 1 unit.

Simple Ways to Buy Dollars_07-22-20_graphic3.png

Source: dxFeed Index Services (


Save Every Time You Trade the Smalls

The Small Exchange has also created a limited number of subscriptions for a one-time payment of $100 that give traders a lifetime of reduced exchange and market data fees when trading the Smalls.

For more information on the Small Exchange’s products and subscription service, visit And be sure to check out my new show on tastytrade, Small Stakes, where Pete Mulmat and I will show viewers how to navigate Small Exchange products every Monday-Friday and always on demand.

If you’d like to find out where to trade the Smalls products check out the list of brokers that offer their products, or tastytrade’s preferred broker tastyworks.


Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on 

tastytrade is a trademark/servicemark owned by tastytrade.

tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”).

tastyworks, Inc. (“tastyworks”) has entered into a Marketing Agreement with tastytrade (“Marketing Agent”) whereby tastyworks pays compensation to Marketing Agent to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastyworks. tastytrade is the parent company of tastyworks. tastyworks and Marketing Agent are separate entities with their own products and services. tastytrade has different privacy policies than tastyworks.

Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.

© copyright 2013 – 2022 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.