A Country At Your Fingertips – Via ETF's

The symbol “EWJ” is the Ishares  Japanese Index Fund tracking the movement of a handful of Japan’s most popular stocks including Toyota, Honda, Hitachi and a host of others. The ticker itself acts as a reasonable “surrogate” for trading the Japanese stock index the “Nikkei” much like the symbol “SPY” closely tracks the U.S SP 500.

I don’t trade these ETF’s but understand that for those of you who don’t trade forex directly – a list of these types of “equity products” could prove valuable,  as a number of my trade ideas/concepts can be mirrored through these “surrogates”.

The Ishares “family” of these “country related” ETF’s include a wide range including:

  • EWA for Australia
  • EWZ for Brazil
  • EWC for Canada
  • EWP for Spain
  • EWU for United Kingdom

These ticker symbols track a handful of the “top companies” in each countries stock index – not the currency!

Often ( but certainly not always ) the correlation between a particular countries currency and its “stock values” exists as an “inverse correlation” as the value of a given countries currency moves lower for example – the “price” of its stocks inversely reflect “higher prices” and move upward.

For a real time example – you may see that I am looking to “get long” JPY , where a corresponding/inverse trade would be to “short the Nikkei” via the ETF “EWJ” ( which trades at just $11.52 )

Keeping a watchlist of these “country related” ETF’s is a great way to get in touch with some “big picture” movement, while still being able to place an affordable trade through your average day-to-day brokerage.


I am still looking at further weakness in USD and see opportunities to enter “short” via several currency pairs here again today ( if you’re not already in the trade).

Help me get a better read on what kind of information you are looking for by filling out this reader poll: click here to vote

As well I see the recent “drop” in Yen as providing several low risk entries “long JPY” if indeed risk comes off here.

6 Responses

  1. Fabio August 14, 2013 / 2:27 pm

    Kong, just a question: don’t understand why you are looking to short USD while you are short QQQ. It’s a little in contrast with what you stated over here. It’s a short live trade? That in QQQ i suppose.
    Keep up the good work.

    • Forex Kong August 14, 2013 / 2:43 pm

      I see that readers continue to miss this – again and again and again.

      USD is trading “in tandem with stocks” not opposite!

      I expect both USD as well U.S equities to move together, not inverse.

      Yesterday – stocks up and dollar up.

      This corelation has “flipped and flopped” several times over the past few months, but as I see it now – I am short BOTH QQQ as well USD.
      Today – stocks down and dollar down.

      • Fabio August 14, 2013 / 2:59 pm

        Thank you sir. So we have to expect a formidable accumulation of value on that side of the world. It’s an armageddon scenario?

        • Forex Kong August 14, 2013 / 3:12 pm

          He he he……looking back over some of the older posts here, you’ll catch the bit on bonds, the dollar, stocks etc…

          Bonds are generally the first to go ( as we’ve clearly seens via TLT ) then / along with a currency shows its weakness ( kinda like USD topped at 84 area on $dxy back in July ) and the last of em to go is always ( and even moreso in this case with the ridiculous pump job by Fed ) stocks.

          So…I’ve made a shit tonne “short USD” for literally months now (check USD/JPY from 101 to 96) as well USD/CAD and a host of trades “long JPY” also being a “risk off/bearish” trade idea while during the entire time US stocks continue to grind across the top.

          Risk has already “well exited the building” my friend.

          Stock traders just can’t open their eyes wide enough….until they wake up going “Oh! I’m down on my IMMR trade?? WTF happened?? ”

          I maintain that trading currency is “pro active” and not “re active”.

  2. Jworthy August 14, 2013 / 6:15 pm

    Hey Kong,

    Thanks for this really great post. I am impressed with how you paired a macro observation with such an actionable idea. I think you’ll have pleased the entirety of your poll respondents… as impossible as that seemed! 🙂

    Thanks as well for your explanation in the prior comments. I think I’ve heard you mention that before. But I appreciate a reminder on how these things “unwind.”


  3. Power Corrupts August 14, 2013 / 8:07 pm

    Kong! capital flows freely (most of the time) globally, all asset classes and economies get to join the party in some shape or form (with a few exceptions like n. korea etc). it can be overwhelming. thanks for sharing your clear insights!

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