Think it is time to short the US Dollar.

I read an article on Kitco's gold app that the US Dollar has risen to a 3 year high. Right now it is at 84.5 points on the USD index or USDX as I take it.

Here are some articles from my research:

http://www.marketwatch.com/story/new-etfs-allow-investors-to-play-us-dollar-movements
http://currencyetf.net/us-dollar-etf.htm

But...then I found a pair of 3x Bull/Bear ETFs that looked promising: http://www.powersharesetns.com/portal/site/etns/currency

Seems this is one of the only pairs of ETFs out there for my purpose, and I am fairly confident that I will make a good return on this short (I will report how it goes. I am just a novice after all) so I like 3x ETFs.


The Play:

I know the dollar is at a 3 year high (84.5 on USD index). This is right after some really good news, so the dollar will probably settle. I may be wrong and here comes some great news after the good news and the dollar really takes off...well...I'm catching the falling knife I guess. Perhaps I should go long on the US dollar because it does seem the US economy is improving...at least on paper...but then again I believe it could be all wind.

So the only think I BELIEVE right now is that the dollar is at a local maximum and will come down in the near future. I believe this enough to act on it. Let's look at the charts on this ETF.

The current price for the 3x Bear ETN of choice is ~$13.3...and this is supposed to be a 3 year high from 1 source. Well, it is a high, but..a quick chart check reveals this is indeed the case: http://www.marketwatch.com/investing/index/DXY

So...Wait. I thought I was investing in a ETF now I see this is an ETN...and one whose daily movements do not correspond to the market movements very well it seems. Well. This seems a lot riskier now, but I think I am going to go through with this plan.

Specs:
I am going to execute an order triggers order. Where I buy at a certain price and then trigger a sell at a reasonably higher price. I will not try to make maximum profit, I WANT OUT of this position so I am just going to try to make a little bit of money. I am going to use the charts to determine roughly where to buy and sell.

Buy: UDNT Shares...$500 dollars or so worth.

Time period: Day...I may set my limit price too low and not catch the trade at all, but this is a short trade and I DO NOT want to be stuck in this position!
Limit Buy Price: Lets say 13.0. I don't want to miss this, and the most recent low of this ETN was ~12.8 a bit over a month ago. But I definitely don't want to pay too much. And I don't want the dollar to jump to 86 on the USD index for that would be a disaster for me.

Sell Price: I don't want to try and make too much money and then have the trade leave me behind. One month ago there was a high of $15...but this is not going to happen since the recent prices were about $14 before this decline. So I will bite my ambition and shoot for $13.8 to play it really safe--or what I think is safe. This will be a GTC since it might take awhile for the price to decline.

Escape: If the dollar starts to skyrocket, I will sell this and take the loss, hopefully during a dip. Because I think over the long term the USD will be increasing in value and I do not want to hold on to a 3x bear ETN.

Let's see how this trade looks in the Optionshouse calculator. Maybe its just not worth the risk.

So I would trade $38 shares and take a $24 profit if everything goes as anticipated...this trade is looking worse and worse.

Now the OptionsHouse platform is telling me the market price is 0.0000

SO I will try this as a virtual trade :( just to see what happens when OptionsHouse gives a ridiculous market price...I don't want to lose $500.

I wish there was a better way to short the USD. I feel like this is a great opportunity. More research I guess. BUT I HAVE HOMEWORK TO DO!!

Well, there is UDN. A regular, non 3x bearish ETF. And I stand to make 30 cents for every $25 share if the trade goes as planned. Really not worth it. I will report back on what happens with the virtual trade though. Oh well. I will have to wait to use my real money another day.

RESULTS:

Even though the USD behaved as I expected, rising to ~84.55 before falling to 82.50 today (7-10-13), UDNT did not track the price. As a result, the trade never executed in the virtual account. Oh well. The market price was not zero as OptionsHouse said before. In fact, as the USD dropped UDNT dropped to 13.01...I thought this was a bear ETN? Apparently this is for long positions only, and is not good for short-term trading.