Currency exchange traded funds (ETFs) are a popular and simple way to get exposure to the foreign exchange. As investors discover these and other ETFs, there may inevitably be questions about using them.
Let’s tackle a few that we’ve seen from time to time.
1. Can you short currency ETFs?
Yes, ETFs can be shorted. But don’t forget that there are also ETFs that do the shorting for you, which might make your life easier. Read our special reports on currency ETFs and leveraged/inverse ETFs for more details on how this works.
2. Is it possible to get triple-digit returns using these ETFs?
If it were that easy to get returns that large, wouldn’t every investor be doing things like this? Instead of focusing on hitting hard-to-reach targets with your portfolio, think about taking a more methodical approach that leads to steady performance and downside protection. We use a simple strategy of trend following, which has us in and out of positions based on the long-term trend lines. You can learn the details about how it works here.