Trading Forex in Baskets to diversify trading risk for both, speculative trading or hedging Forex risk by 
In this post I like to answer the question I got about the earlier post of Oil in EUR http://blogs.fxstreet.com/forexhedge/2009/01/15/oil-in-euro/
The blue line, on the chart below, is the price of the oil ETF USO which is traded in US Dollars, but how can manage currency risk for non US Dollar traders, for example trading in Euro’s ?
In the middle pane we see the EUR ETF representing EUR/USD rate while at the bottom we show the difference between the price of USO in US Dollars and Euro’s.
The question was how are we going to hedge our USO ETF, quoted in US Dollars, for a possible currency risk, so not the risk of the USO price itself !
Looking to the difference at the bottom of the chart we add two long moving average on the difference.
We hedge USO ETF, quoted in US Dollars, for currency risk to go short EUR/USD for the same amount at the crossing point of the two moving averages.
Of course there are many different ways to hedge, so have a look at our website www.2hedge.com and go to the link FX_Hedge which shows some examples of currencies hedge in percent.
hi ron thank you for explanation.
Hi Ron,
So if i live in germany and bought ETF USO with euro’s when the crossing of the moving averages happen I would short the euro as a hedge ? I’m new to hedging but want to know more indeed.
Regards
Sean
Thanks Sean, if you like more mail me at the company.