DXY filters: do you check the dollar index before trading?

Trading a dollar pair without looking at the dollar's overall direction is like driving one road while ignoring the traffic report. The DXY gives the macro context, and several strategies refuse entries against it.

DXY filters: do you check the dollar index before trading? — bid-ask spread diagram
The bid-ask spread on a currency pair

How do you use the DXY?

  • as a filter, a trigger or just context
  • how you handle DXY signals that conflict with the pair chart
  • the false signals the basket can produce
DXY filters: do you check the dollar index before trading? — risk-reward diagram
A risk-reward ratio of 1 to 2

The DXY guide explains the basket and its limits.

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