TradingMarkets Everything You Need to Know About Trading ETFs: FXY, FXE, FXB
Are you interested in the opportunities in trading currencies like the Euro, the Japanese yen and the British pound, while never leaving the comfort and familiarity of your current brokerage account?
CurrencyShares may have a solution for you.
The CurrencyShares series of exchange-traded funds lets ETF traders and investors participate in the often-sizable trends and breakouts in global currencies. Currency trading is a favorite for both short term traders as well as those who like to trade based on longer-term patterns. With its line of exchange-traded funds linked to most of the major currencies currently traded around the world, CurrencyShares brings together the world of currency trading with the world of ETF trading.
Among the most widely traded CurrencyShares ETFs are the CurrencyShares Japanese Yen Trust ETF, FXY
(
FXY |
Quote |
Chart |
News |
PowerRating), the CurrencyShares Euro Trust ETF, FXE
(
FXE |
Quote |
Chart |
News |
PowerRating), and the CurrencyShares British Pound Sterling Trust ETF, FXB
(
FXB |
Quote |
Chart |
News |
PowerRating). However, CurrencyShares has exchange-traded funds linked to other currencies such as the Australian dollar, the Mexican peso, and the Russian ruble.
CurrencyShares are offered through Rydex Investments, which pioneered inverse mutual funds and has a number of widely-traded exchange-traded funds in its own name.
What are ETF traders actually trading when they trade CurrencyShares ETFs? These exchange-traded funds represent shares in a trust that owns the given currency (euros, yen, Canadian dollars, etc.). Currency prices are tracked using the WM/Reuters Closing Spot rate.
Traders interested in trading these products should keep in mind that although they are exchange-traded funds, they behave more like the currencies they are linked to than stocks. This may result in price behavior that is atypical from what ETF traders may have come to expect from stock or equity ETFs.
Coming next: Meet the Commodities! On Thursday we’ll take a look at some of the more widely-traded commodity-linked ETFs in groups like agriculture and energy. Be sure to check TradingMarkets Everything You Need to Know About Trading ETFs all week for more on the ETFs you need to know.
According to a recent report, eight out of ten securities traded are exchange-traded funds. Want to learn how to trade them? Click here to find out what traders are saying about Larry Connors’ new book, Short Term Trading Strategies That Work: A Quantified Guide to Trading Stocks and ETFs!
David Penn is Editor in Chief at TradingMarkets.com.