It is not just a measure of the performance of the USD against a basket of currencies, but it has also evolved to become a traded instrument on its own.
Why the US Dollar Index Sucks as a Trading Tool Traders who dollar index for binary options just starting out at binary options and who do not understand the fundamental factors affecting the US Dollar simply will not be able to make sense of this tool. Nearly every international trade is denominated in US Dollars, be it crude oil sales, imports and exports, and even financial trading.
As such, the USD is exposed to a host of fundamental influences and the trader has to spend quite some time to learn about these. Traders can now use this knowledge to pull a lot of possible trades in the binary options market. Traders will be able to understand that the relationship between crude oil and the USD is an inverse one, and be able to trade all manner of crude oil-based binary options trades, using the movement of the US Dollar Index as a guide.
As long as the USD Index is rising, crude oil will keep dropping. The expiry times should not be within a one week time frame so as to give your trade enough room to be in the money, but not too much time as to stage a reversal.