One key to success is to trade the current trends. This is true for the volatility of the currency markets. For those wanting to trade currencies but are not using FX trading, you can use the ETFs for all major currencies in the CNBC Portfolio Challenge. The best market trend I have found so far is that the U.S. Dollar is rallying over the last month. Use the PowerShares DB US Dollar Index Bullish Fund (UUP) to go long the Dollar. This ETF is up 8% in the last month. Of course, you want this to be a smaller position in your portfolio as the rally continues over the short-term.
PowerShares DB US Dollar Index Bullish Fund (UUP) is a separate series of PowerShares DB US Dollar Index Trust (the Trust). The Fund’s subsidiary is DB US Dollar Index Bullish Master Fund (the Master Fund), a separate series of DB US Dollar Index Bullish Master Trust (the Master Trust).
The inverse trend is the Euros continued decline. The ETF play is the ProShares UltraShort Euro (EUO) that is a super-short Euro play. This ETF is only up a little over 4% in the last month. However, if any countries in Europe default or increase their possiblilty of default then the EUO will be a great play as it is super short for the EURO.
Both ETFs, UUP and EUO are shown in the chart below.
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