When you short a currency, you’re betting against its value increasing – in other words, you think it will fall. If your prediction proves correct, you’d make a profit from the price drop. The easiest way to short USD is by investing in an inverse USD index ETF.

Shorting the Dollar Explained can trade USD-based pairs on Forex and use leverage CFDs to bet against the dollar. If you choose to do this, it’s important to analyze your trades after each one to understand what went right and wrong so that you can improve as a trader.

Shorting the Dollar Explained: Market Insights

Another common method for shorting the dollar is to invest in assets that aren’t the dollar, such as commodities, homes, or businesses. This can be done via a mortgage, for example, where you borrow money to buy an appreciating asset and pay it back over time, with the added advantage that the dollar will have less purchasing power over time due to inflation.

It’s also possible to short the dollar through some of the major exchange-traded funds (ETFs). These include the iShares Currency Subcommittee Short-Term USD Inverse ETF (NYSEArca: UBUD), Deutsche Bank Short-Term USD Currency Portfolio Index – Excess Return (NYSEArca: UDN), and the DB Short US Dollar Index Fund (NYSEArca: DSD). These products are highly volatile and may be more suitable for traders with high risk tolerance and an understanding of the risks involved in trading USD short.