How to measure how the Australian dollar is faring independent of the US dollar
What you want is the average change in rate of the Australian Dollar against multiple other currencies, to even out the effect of moves in a single other currency. People often look at the trade-weighted exchange rate to get an idea of this, as it allows you to look at the currencies that are most relevant, rather than every tiny other currency having an equal weight. If you're interested in slower scale changes, one option is to use indexes that value a common commodity in different currencies such as the Big Mac Index.  If a Big Mac costs more in AUD but stays the same in USD, then AUD have gone up. The best answer to your question would to be what the interest rates are like in Australia itself.  The Reserve Bank sets the target ‘cash rate’, which is the market   interest rate on overnight funds. It uses this as the instrument for   monetary policy, and influences the cash rate through its financial   market operations. Decisions regarding the cash rate target are made   by the Reserve Bank Board and explained in a media release announcing   the decision at 2.30 pm after each Board meeting. (Prior to December   2007, media releases were issued only when the cash rate target was   changed.) From Investopedia: How Rates Are Calculated  Each central bank's board of directors controls the monetary policy of its    country and the short-term prime   interest rate that banks use to borrow from each other. When the   economy is doing well, interest rates are hiked in order to curb   inflation and when times are tough, cut rates to encourage lending and   inject money into the economy. Have a look at this from graph from http://www.rba.gov.au/monetary-policy/int-rate-decisions/ I would then go to a website that allows you to compare, graphically, whichever interest rate you want.(Or you could get the raw data and run some analysis, to each his own)  FYI, this topic (FX) is incredibly complex and I hope my answer satisfies your needs.Otherwise, talk to a quant. You will need a ton of data inputs to model the entire economy of Australia to try and predict what the central bank will do, which is what people try and do everyday. Best of luck! To make it simple, just use gold as the main benchmark. Gold price never moves, FIAT currencies move around the price of gold.  So, when comparing US$ and Australian dollars to the gold, you know which currency is moving up and which down.
It's very simple.  Use USDSGD.  Here's why: Presenting profits/losses in other currencies or denominations can be useful if you want to sketch out the profit/loss you made due to foreign currency exposure but depending on the audience of your app this may sometimes confuse people (like yourself). What you are asking about is called Interest Rate Parity. Or for a longer explanation the article Interest Rate Parity at Wikipedia.  If the US has a rate of say zero, and the rate in Elbonia is 10%, one believes that in a year the exchange rate will be shifted by 10%, i.e. it will take 1.1 unit of their currency to get the dollars one unit did prior.  Else, you'd always profit from such FOREX trades.  (Disclaimer - I am not claiming this to be true or false, just offering one theory that explains the rate difference effect on future exchange rates. At present, Australia is looking like a good bet.  I'll need to find a new job as part of the move.  The problem with waiting until after things fall apart to move is that it may no longer be easily possible, and even if it is possible to leave, it may not be possible to take wealth out of the country.  It would not surprise me at all for instance, to discover after high double digit inflation starts, that it was difficult to move precious metals out of the country.    There is a distinct possibility that the government might choose to seize precious metals even from people not leaving.  It wouldn't be the first time in US history that it was illegal for US citizens to own gold and silver (for those owning coins minted after 1933, the government could instead choose to redeem them at face value - i.e., a $20 gold piece for $20). Money is no longer backed by gold. It's backed by the faith and credit of the issuing government. A new country,say, will first trade goods for dollars or other currency, so its ownership of gold is irrelevant. Its currency will trade at a value based on supply/demand for that currency. If it's an unstable currency, inflating too quickly, the exchange rate will reflect that as well.  More than that your question kind of mixes a number of issues, loosely related. First is the gold question, second, the question of currency exchange rates and they are derived, with an example of a new country. Both interesting, but distinct processes. "Option pricing models used by exchanges to calculate settlement prices (premiums) use a volatility measure usually describes as the current actual volatility.  This is a historic volatility measure based on standard deviation across a given time period - usually 30 to 90 days.   During a trading session, an investor can use the readily available information for a given option to infer the ""implied volatility"".  Presumably you know the option pricing model (Black-Scholes).  It is easy to calculate the other variables used in the pricing model - the time value, the strike price, the spot price, the ""risk free"" interest rate, and anything else I may have forgotten right now.  Plug all of these into the model and solve for volatility.  This give the ""implied volatility"", so named because it has been inferred from the current price (bid or offer). Of course, there is no guarantee that the calculated (implied) volatility will match the volatility used by the exchange in their calculation of fair price at settlement on the day (or on the previous day's settlement).  Comparing the implied volatility from the previous day's settlement price to the implied volatility of the current price (bid or offer) may give you some measure of the fairness of the quoted price (if there is no perceived change in future volatility).  What such a comparison will do is to give you a measure of the degree to which the current market's perception of future volatility has changed over the course of the trading day.   So, specific to your question, you do not want to use an annualised measure.  The best you can do is compare the implied volatility in the current price to the implied volatility of the previous day's settlement price while at the same time making a subjective judgement about how you see volatility changing in the future and how this has been reflected in the current price." That goodness here in Australia we don't annualise GDP figures rrom just on individual quarter. That is such a stupid practice. We state the quarterly figure and then add the previous three quarters to calculate the rolling 12 month figure. Makes so much more sense. "It is measured in US dollars.  The US cannot just print the money because that would cause inflation.  Remember that money is really just a convenient placeholder for the barter system.  Creating more money regardless of whether there is more value in the economy (work, resources, etc.) is a very bad idea, and doing so has collapsed the economies of many countries. Debt increasing means that the US owes other countries more money.  So yes, they are receiving more money from other countries, but the US has to pay it all back with interest eventually. The US government spends more money than it receives in taxes.  To decrease the debt, spending needs to decrease and/or taxes need to increase. Many countries lend to the US.  One of the biggest is China.  These countries do so because of interest -- the US pays back more money than it gets lent, so the lending countries make a profit. If China suddenly called in all its debt to the US, this would severely damage the world economy.  China's biggest trading partner is the US, so it has no interest in harming the US this way; it would harm itself.  Additionally, the US would probably refuse to pay it (not to mention that it can't), and then China would lose all the money it ""invested"" in the US.  It would benefit no one." "The basic idea is that money's worth is dependent on what it can be used to buy. The principal driver of monetary exchange (using one type of currency to ""buy"" another) is that usually, transactions for goods or services in a particular country must be made using that country's official currency. So, if the U.S. has something very valuable (let's say iPhones) that people in other countries want to buy, they have to buy dollars and then use those dollars to buy the consumer electronics from sellers in the U.S. Each country has a ""basket"" of things they produce that another country will want, and a ""shopping list"" of things of value they want from that other country. The net difference in value between the basket and shopping list determines the relative demand for one currency over another; the dollar might gain value relative to the Euro (and thus a Euro will buy fewer dollars) because Europeans want iPhones more than Americans want BMWs, or conversely the Euro can gain strength against the dollar because Americans want BMWs more than Europeans want iPhones. The fact that iPhones are actually made in China kind of plays into it, kind of not; Apple pays the Chinese in Yuan to make them, then receives dollars from international buyers and ships the iPhones to them, making both the Yuan and the dollar more valuable than the Euro or other currencies. The total amount of a currency in circulation can also affect relative prices. Right now the American Fed is pumping billions of dollars a day into the U.S. economy. This means there's a lot of dollars floating around, so they're easy to get and thus demand for them decreases. It's more complex than that (for instance, the dollar is also used as the international standard for trade in oil; you want oil, you pay for it in dollars, increasing demand for dollars even when the United States doesn't actually put any oil on the market to sell), but basically think of different currencies as having value in and of themselves, and that value is affected by how much the market wants that currency." I successfully used Currency Fair a few times, they seem to cater for both Australia and the UK. If I remember correctly, you can set everything up via Internet. As they explain on their website, first you open an account with them, then you transfer AUD to an Australian bank account that they will give you, then you exchange and transfer the money to your friend on their web page. Usually they are cheaper than PayPal, especially if you have time to play with their exchange by marketplace functionality (not recommended if you just want to do the transfer). Well i'm not saying it will be terrible, i could have said this wrong but it might be terrible. Dollar is not the international currency just in oil but mostly everything. Different countries uses dollar to trade, this is one of the core reasons of US economy being the strongest. US should not be tolerant about this sort of stuff since if this trend continuous it could be disastrous. First of all, I think I'll clear off some confusion in the topic. The Sterling Ratio is a very simple investment portfolio measurement that fits nicely to the topic of personal finance, although not so much to a foreign exchange trading system. The Sterling Ratio is mainly used in the context of hedge funds to measure its risk-reward ratio for long term investments. To do so, it has been adapted to the following in order to appear more like the Sharpe Ratio:  I Suppose this is why you question the Average Largest Draw-down. I'll come back to that later. It's original definition, suggested by the company Deane Sterling Jones, is a little different and perhaps the one you should use if you want to measure your trading system's long term risk-reward ratio, which is as followed:  Note: Average Annual Draw-down has to be negative on the above-mentioned formula. This one is very simple to calculate and the one to use if you want to measure any portfolio's long-term results, such an example of a 5 or 10 years period and calculate the average of each years largest drawdown. To answer @Dheer's comment, this specific measurement can also be used in personal investments portfolio, which is considered a topic related to personal finance. Back to the first one, which answers your question. It's used in most cases in investment strategies, such as hedging, not trading systems. By hedging I mean that in these cases long term investments are made in anti-correlated securities to obtain a diversified portfolio with a very stable growth. This one is calculated normally annually because you rely on the Annual Risk-Free Rate. Having that in mind I think you can guess that the Average Largest Drawdown is the average between the Largest/Maximum Drawdown from each security in the portfolio. And this doesn't make sense in a trading system. Example: If you have invested in 5 different securities where we calculated the Largest Draw-down for each, such as represented in the following array: MaxDD[5] = { 0.12, 0.23, 0.06, 0.36, 0.09 }, in this case your Average Largest Draw-down is the average(MaxDD) that equals 0.172 or 17,2% If your portfolio's annual return is 15% and the Risk-free Rate is 10%, your Sterling Ratio SR = (0.15 - 0.10)/0.172, which result to 0.29. The higher the rate better is the risk-reward ratio of your portfolio. I suggest in your case to only use the original Sterling Ratio to calculate your long-term risk-reward, in any other case I suggest looking at the Sharpe and Sortino ratios instead. The value of the asset doesn't change just because of the exchange rate change. If a thing (valued in USD) costs USD $1 and USD $1 = CAN $1 (so the thing is also valued CAN $1) today and tomorrow CAN $1 worth USD $0.5 - the thing will continue being worth USD $1. If the thing is valued in CAN $, after the exchange rate change, the thing will be worth USD $2, but will still be valued CAN $1. What you're talking about is price quotes, not value. Price quotes will very quickly reach the value, since any deviation will be used by the traders to make profits on arbitrage. And algo-traders will make it happen much quicker than you can even notice the arbitrage existence. fx-rate.net offers a AUDUSD exchange rate comparison, which includes paypal: Currencyfair    $1.14 Transferwise    $ 2.29 Worldremit  $ 3.50 Xendpay $ 3.71 Tranzfers   $ 5.52 Ukforex $ 7.35 Skrill  $ 15.13  Paypal  $ 25.77  Kantox  $ 27.76  http://fx-rate.net/currency-transfer/?c_input=AUD&cp_input=USD There's a concept called interest rate parity, which sort of says that you cannot profit on the difference in interest rates. This difference accounts for the predicted movement in exchange rates as well, along with the stability of the currencies. "When portfolio positions are reported in percentages, those percentages are relative to the portfolio's base equity.  When you start out, that is equal to the cash you have in a portfolio.  Later it's the net equity of the portfolio (i.e., how much money you could withdraw if you were to exit all your positions). If you put $5,000 into your account and are long and short 50%, then you are long $2,500 and short $2,500.  If it's 100% and -100%, then long and short $5,000. ""Leverage"" is often computed gross (as if all positions were long).  So if you have 100% and -100%, then your broker may say you are ""levered 2 to 1.""  That is, your gross exposure is twice as large as your underlying base equity."