Shorting Oil When Dollar Rises

The price of oil is seen as a hedge against a falling dollar. If the dollar falls, the oil price should rise (or vice versa). What happens the next day if they go in tandem? Let’s test an oil and dollar trading strategy.

  1. If the dollar rises more than 0.25% (using UUP as a proxy) from yesterday’s close until today’s, and USO also rises 0.25%, go short USO at the close and exit on the close next day.

This is all there is to it. Here are the results from January 2007 until the present:

P/L in % #trades #wins Avg
55.83 117 70 0.48

And here is the equity curve:

Some of these gains are unlikely to come from the dollar effect: Before you invest in USO, you have to understand how it’s structured. It’s meant to replicate the price of oil, but in the long term it won’t because of different costs. There is a lot of info about it on the internet.

Relevant article:

We have probably only touched upon the links between oil and the dollar. You can probably backtest many other ideas that backtest oil and dollar strategies.

 

Similar Posts

Stocks Vs. Bonds Investment Strategy: Which Asset To Choose (Returns, Performance, Risk)

ByOddmund Groette

For many, owning a business or buying expensive real estate is out of the question. An alternative to growing your net worth over time is to invest in financial instruments such as stocks and bonds. In this article, we look at the stock vs. bond investment strategy. Various investment strategies use stocks and bonds in…

Can You Get Rich Trading Penny Stocks? (Annual Returns Of Penny Stocks)

ByOddmund Groette

Penny stocks offer a low entry and often the lure of striking it big. The internet is full of stories about how you can make millions and gain thousands of percent of returns in penny stocks. Is it any reality in this? Can you get rich trading penny stocks? Unfortunately not: You are unlikely to…

Qstick Indicator Trading Strategy – What Is It And How Does It Perform? (Backtest & Trading Rules)

ByOddmund Groette

There are many momentum and trend indicators out there, but the Qstick indicator is not one that shows up very often. What is the Qstick indicator?  The Qstick indicator is a technical indicator that consists of two moving averages and it is used to identify trends. it can be used to create a Qstick Indicator…

Butterfly Harmonic Pattern Trading Strategy — What Is It? (Backtest)

ByOddmund Groette

There are many harmonic chart patterns that traders use to spot potential price reversal periods, and the Butterfly pattern is one of them. But what is Butterfly harmonic pattern trading strategy? The Butterfly harmonic pattern is a retracement and continuation chart formation that indicates a potential price reversal. It is a five-point harmonic pattern with…

Gold Trading Strategies – GLD Weekend Strategy & Swing Trading System

ByOddmund Groette

What does gold trading mean and what about Gold Trading Strategies? Gold, along with crude oil, is one of the world’s most widely traded raw materials. It is undoubtedly the most popular precious metal, both financially and culturally. Gold Trading Strategies and Gold trading is speculating on gold market prices to make a profit. This…

Corn Trading Strategy (Rules, Settings, Backtest, Performance, Example)

ByOddmund Groette

Agriculture futures offer a vast array of hedging and speculative opportunities, and Corn is one of the most highly traded commodities globally. Also known as maize, corn is widely cultivated in countless varieties throughout the world. Corn futures trading requires in-depth knowledge of the commodity, as well as a thoroughly researched futures strategy. So, what…

  • […] DreamEarn-Share Market, NSE, BSE, Indian Stock Market, Share Tips, Bombay Stock Exchange, Share Market News SBI Trading above resistance ZoneTech PR Watch: Sprint Grows WingsThe New Left Review Interviews Richard DuncanSuperintendent statement on MUSD bondsPeak Oil PrimerFinancial Sector Charts & Technical Analysis for November 2012Shorting Oil When Dollar Rises […]

    Reply