When trading FX with XM’s MT4/MT5, the US Dollar Index is one of the things that traders should know if possible. The US dollar is the world’s base currency and a major currency. Many successful traders analyze and utilize the US Dollar Index in their trades.
- XMtrading
- The Basics of Dollar Index Trading with XM
- Benefits of Trading the Dollar Index with XM
- ① You can trade the “pure strength” or “weakness” of the US dollar (the biggest advantage).
- ② Less correlation noise, making it easy to understand the direction
- ③ It acts as a “filter” to improve the accuracy of FX trading.
- ④ Excellent compatibility with US indicators and monetary policy
- ⑤ Diversified currency exchange rates, resulting in relatively few sudden, sudden fluctuations.
- How to Trade the Dollar Index with XM
- How to Analyze the US Dollar Index
- XM Dollar Index Trading Strategy
- ① Overall Strategy Design (Most Important)
- ② Standard 1: Interest Rate-Driven/Trend-Following Strategy (Strongest)
- ③ Standard 2: “First Move Follow” Strategy After Important Indicators
- ④ Standard 3: Range Breakout Strategy (For Beginning of Week/Month)
- ⑤ “Filter Strategy” in combination with FX (Very Important)
- Frequently Asked Questions About Dollar Index Trading on XM
XMtrading
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| Head office location | Unit E, F28, Eden Plaza, Eden Island, Republic of Seychelles |
| Founding year | 2009 |
| Financial License | （FSA）SD010：Tradexfin Mauritius Financial Services Commission (FSC：)：Fintrade Limited Cyprus Securities and Exchange Commission (CySEC)：Trading Point of Financial Instruments Ltd |
| Language support | English、日本語、Malay、Thai |
| Platform | MetaTrader 4 (MT4)／MetaTrader 5 (MT5) |
| Service Countries | Over 190 countries |
| Number of users | Over 1 million accounts |
| Max Leverage | 1000x |
| Eligible products | Forex、Metal、Stocks、Equity Indices / Index CFD、Energy CFD、Commodities、Cryptocurrency |
The Basics of Dollar Index Trading with XM
The US Dollar Index (USDX), available on XM, is a CFD product that allows you to trade the overall strength or weakness of the US Dollar using a single index.
Even experienced FX traders often have misunderstandings about this product, so let’s clarify the basics.
This is useful for both futures and spot trading, so we’ll explain the details. There’s an explanation of the Dollar Index on the official website, so click on it. Currently, there are numerous services available for standard and micro accounts, including the USD/JPY symbol.
① What is the Dollar Index (USDX)?
Basic Definition
An index showing the strength of the US Dollar against six major currencies.
Composition Ratio 👇
Euro (EUR): Approximately 57.6%
Japanese Yen (JPY): Approximately 13.6%
British Pound (GBP): Approximately 11.9%
Canadian Dollar (CAD): Approximately 9.1%
Swedish Krona (SEK): Approximately 4.2%
Swiss Franc (CHF): Approximately 3.6%
👉 The EUR has such a large influence that it is essentially referred to as a “Euro x Dollar Index.”
② Positioning of the US Dollar Index at XM
Trading Product Name
USDX (US Dollar Index CFD)
- Displayed in the “CFD (Indices)” category on MT4/MT5.
③ Features of XM US Dollar Index Trading
✔ Differences from FX Currency Pairs
| 項目 | FX（USD/JPY） | ドルインデックス |
|---|---|---|
| 比較対象 | 単一通貨 | 複数通貨 |
| ノイズ | 多い | 少ない |
| 米ドルの純粋な強弱 | △ | ◎ |
✔ Leverage
Maximum leverage: Approximately 100x (varies depending on account and conditions)
- Lower than FX
👉 Relatively stable volatility
✔ Trading Hours
Almost 24 hours (weekdays)
US market hours are the most active
④ Fundamentals of Dollar Index Price Movements
What happens if the index rises?
👉 USD strengthens
USD/JPY: Likely to rise
EUR/USD: Likely to fall
What happens if the index falls?
👉 USD weakens
USD/JPY: Likely to fall
EUR/USD: Likely to rise
⚠ However,
Not a perfect inverse correlation
Benefits of Trading the Dollar Index with XM
The benefit of trading the Dollar Index (USDX) with XM is that it allows you to simply target the essential movements of the US dollar in real time over time, something that cannot be fully captured with FX currency pairs.
Here, we will summarize the benefits from a practical perspective. The above also applies to stocks and gold. Keep track of market prices on the screen and use them to place orders from the wide range of financial products available. Investors should pay close attention to economic indicators.
① You can trade the “pure strength” or “weakness” of the US dollar (the biggest advantage).
Differences from FX
USD/JPY →
US dollar × yen situation (Bank of Japan, interest rates, risk aversion)
EUR/USD →
US dollar × eurozone situation
👉 Neither is “just the dollar”
With the dollar index,
US dollar vs. a composite of six major currencies
Less susceptible to the idiosyncratic factors of a single country
✅ You can directly trade whether the dollar is truly strong or weak
② Less correlation noise, making it easy to understand the direction
Common problems with FX
USD/JPY rises
EUR/USD also rises
→ Inconsistent direction
In the case of USDX
Rise = strong dollar
Fall = weak dollar
👉 Interpretation is unambiguous
Especially in day trading
Swing trading
Decisions are much easier to make.
③ It acts as a “filter” to improve the accuracy of FX trading.
Specific Benefits
USDX is rising
→ Prioritize a dollar-buying strategy
USDX is falling
→ Prioritize a dollar-selling strategy
Example
Buying USD/JPY
- USDX is also on an upward trend
👉 Experience an increased win rate
👉 The ability to “decide not to enter” is also of great value
④ Excellent compatibility with US indicators and monetary policy
Highly influential events
US CPI
Employment statistics
FOMC
Statements by Fed officials
👉 These events are almost directly reflected in USDX.
Unlike FX, there is less uncertainty about whether the dollar is strong or not.
⑤ Diversified currency exchange rates, resulting in relatively few sudden, sudden fluctuations.
Reasons
Spread across 6 currencies
Low single-country risk
👉
Less susceptible to flash crashes
Less susceptible to sudden intervention
※ More stable price movements than FX
How to Trade the Dollar Index with XM
We’ll explain the practical steps for trading the Dollar Index (USDX) with XM in five steps: Account Setup → Chart Analysis → Entry → Management → Exit.
(This is a guide for both MT4 and MT5, even beginners can follow.)
① Pre-Trading Preparation (Account and Environment)
✔ Account Type
Trading is possible with Standard, KIWAMI, and Micro
No additional application required
✔ Trading Platform
MT4 or MT5
PC recommended (due to the large amount of information contained in indices)
② Displaying the US Dollar Index (USDX)
Procedure (MT4/MT5)
Open “Market Watch”
Right-click → “Show All”
“CFD (Indices)” category
Select USDX / US Dollar Index
Open the chart
👉 If it does not appear, it will be under “Index CFDs” or “Cash Indices”
③ Chart Analysis (Very Important)
① Environmental Awareness (Required)
Higher Time Frame: 1-Hour or 4-Hour
Points to Check:
Trend Direction
New Highs and Lows
Range or Trend
② Use in combination for improved accuracy
Moving averages (20 and 50)
Support and resistance
US indicator calendar
👉 USDX
Basically, 70% fundamental and 30% technical
④ Entry flow
Example 1: Targeting a stronger dollar (Buy)
US indicators exceed expectations
Interest rates rise → Buy dollars
USDX forms a pullback
👉 Buy USDX
Example 2: Targeting a weaker dollar (Sell)
FOMC dovish
Expectations for a rate cut
Rebound peak formation
👉 Sell USDX
How to Analyze the US Dollar Index
The standard approach to analyzing the US Dollar Index (USDX) is to use fundamentals to determine direction and technicals to time it.
Here, we will systematically explain an analysis method that even beginners can easily replicate and use directly on platforms like XM.
① Big Picture: The Basic Structure of USDX Analysis
Priority
1️⃣ Fundamentals (Direction)
2️⃣ Higher-Time Frame Technicals (Environmental Awareness)
3️⃣ Lower-Time Frame Technicals (Entry)
👉 For FX Currency Pairs
70% Fundamentals and 30% Technicals are the Right Principle
② Fundamental Analysis (Most Important)
① Interest Rates and Monetary Policy
Most Impacted on USDX
What to Watch
US Policy Rate
Expectations of Rate Cuts/Raises
FOMC Statement and Dot Plot
Basic Rules
Expectations of Rate Hikes ↑ → USDX Rise
Expectations of Rate Cuts ↑ → USDX Fall
② US Economic Indicators (In Order of Priority)
| 指標 | 影響 |
|---|---|
| CPI（インフレ） | ★★★★★ |
| 雇用統計 | ★★★★☆ |
| PCE | ★★★★☆ |
| GDP | ★★★☆☆ |
👉 The difference from expectation (surprise) is important
③ US Long-Term Interest Rates (10-Year Treasury Yield)
Strong positive correlation with USDX
Interest rates are often a leading indicator
👉 We recommend checking charts side by side
④ Risk Sentiment
Weak stock prices/geopolitical risk
→ Dollar buying
Rising stock prices/risk-on
→ Dollar selling
① Understanding the Environment on Higher Time Frames
1-Hourly / 4-Hourly / Daily
Determining Trend or Range
Points to Consider
High/Low Cuts
Clear Range Width
② Support/Resistance
USDX is an index, so horizontal lines are very effective
Recent Highs/Lows
Price Ranges that Have Repeatedly Rebounded
③ Moving Averages (The Classic)
Recommended Settings:
20EMA
50SMA
How to Use:
Up → Buy on Dips
Down → Sell on Pulls
XM Dollar Index Trading Strategy
XM Dollar Index (USDX) trading strategies are most likely to be successful if they focus on simply tracking the direction of the US dollar.
Here, we’ll summarize strategies that are easy to implement and highly reproducible in the XM environment, categorized by objective.
① Overall Strategy Design (Most Important)
Unlike currency pairs, USDX requires precise direction prediction.
Basic Philosophy
Direction: Fundamentals
Initiative: Technical
Profit Management: Partial Settlement + Trailing
👉 Not Scalping
👉 Day Trading to Swing Trading
② Standard 1: Interest Rate-Driven/Trend-Following Strategy (Strongest)
Suitable for
Beginners to Intermediate
Emphasis on Win Rate and Stability
Environmental Awareness
US 10-Year Treasury Yields Up
CPI and Employment Statistics Strong
FOMC Hawkish
👉 USDX Tends to Trend Up
③ Standard 2: “First Move Follow” Strategy After Important Indicators
Target Indicators
US CPI
Employment Statistics
FOMC
Characteristics
USDX
👉 Directly Reflects Indicator Results
④ Standard 3: Range Breakout Strategy (For Beginning of Week/Month)
Environment
Daily Range Continues for Several Days
US Event Ahead
Entry
Range Breakout → Buy
Range Breakout → Buy Sell
Ideally, a retest after a breakout is desirable.
Take profits
Take partial profits at the initial move
Expect the remainder to trend
⑤ “Filter Strategy” in combination with FX (Very Important)
How to use
USDX ↑ →
Priority buying USD/JPY
Selling EUR/USD
Effective
Avoid false starts
Dramatically reduce unnecessary entries
👉 USDX is the “control center”
Frequently Asked Questions About Dollar Index Trading on XM
Below are some frequently asked questions about the Dollar Index (USDX) trading on XM, summarized in Q&A format, focusing on points that beginners and intermediate traders often struggle with.
Q1. Where can I find the Dollar Index on XM?
A.
It’s located in the “CFDs (Indices)” or “Cash Indices” category on MT4/MT5.
If it’s not displayed,
Right-click on the market watch display.
Select “Show All.”
The product name is
👉 USDX/US Dollar Index
Q2. How is it different from FX currency pairs (such as USD/JPY)?
A.
The biggest difference is whether you can trade the strength or weakness of the USD alone.
USD/JPY:
US Dollar × Yen (Japanese factors also influence)
USDX:
US Dollar × Six Major Currencies
👉 It is characterized by its simple direction and is less susceptible to the circumstances of the other country.
Q3. What is the leverage?
A.
XM’s USDX leverage is
👉 Lower than FX (approximately 100x).
- May fluctuate depending on account type, margin status, and sudden market movements.
Q4. Can I scalp?
A.
Yes, but not recommended.
Reason:
Spreads are wider than FX.
Price movements are relatively slow.
👉 Suitable for day trading and swing trading.
(15-minute or longer charts recommended.)
Q5. Is trading during indicator periods risky?
A.
Volatility increases, but it is also a good time to target.
Particularly impactful indicators:
US CPI
Employment Statistics
FOMC
Points to note:
Spreads widen immediately after the announcement.
It is safe to wait 5-15 minutes before trading.
Q6. Are swaps incurred?
A.
Yes.
Swaps are applied across days.
Positive/negative amounts vary depending on the time of year.
👉 Swaps must be confirmed in advance during swing trading.
Q7. I heard that the lot size is different from FX.
A.
That’s correct.
Using the same lot size as FX trading can easily result in excessive risk.
Beginners should start with the minimum lot size.
Always calculate backwards using the following formula: “One loss = 1-2% of your capital.”
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