How to hedge US dollar exposure?

[AirborneTrader]

Hi,

I would really appreciate some suggestions on how best to hedge US dollar exposure. I'm a Canadian that trades US equities. I've ridden the dollar move up by being fully invested in USD which has worked nicely. But I lack experience and a plan on how to hedge against the dollar when it reverses its trend and goes down. So far I simply buy CAD in 1/4 increments to my total account to balance the risks. With the move in the USD yesterday for example I reduced my USD exposure from 100% to 75%. If it reverses trend I'll go 50-50. The problem with this approach is that it takes out half of my buying power, leaving me with 50% of all of my money in CAD cash. Which brings me to ask you guys, how can I hedge more efficiently and retain more of my USD buying power? Futures, options?? I'd appreciate any suggestions.

Thank you in advance!!! :clap:

 

[5SS]

Options are an ... option. There are a few things to consider such as expire date and time decay, I am honestly not the best person to comment on that further. I know a bit but I expect there will be someone here who knows a lot and is better suited.

You could hedge with other pairs, buying the dollar with currencies that might be becoming oversold. EURUSD would be an example but AUDUSD & NZDUSD would be better because they pay positive swaps long so you are getting paid on them every day you hold them whether the trade goes red, green or goes no where.

My analysis (opinion) would say ride it through one last spike into 1.34 area, cash in the position and watch it fall, smugly.

 

[Rhody Trader]

If you want a true hedge, then short USD/CAD in the spot market with a retail forex broker.