I trade US futures and Eurex futures. Mainly NQ, ES, 6E, 6J, FDAX, FGBL and am thinking of looking at GC and CL as well. My account is in USD at the moment but I'm from UK. I'm wondering about currency risk, and whether I should have my account in GBP for trading both US (USD denominated) and EU (EUR denominated) markets.
I'm not keen on using futures to actually hedge my futures account, although I can see a valid reason for doing that. Keen to hear from people that have their futures account in a different country than their own.
Well, same problem here. Since I'm located in Germany I initially funded my account at Mirus with a EUR amount bank transfer, but my account balance is showing up in USD. So I'm facing the same currency risk since my account value changes more or less slightly every day due to this fact...but I don't remember whether or not I even had the choice to fund my account with USD at that time.
Maybe bottom line it could make sense asking the broker to change the account to USD as the leading currency in order to avoid these currency fluctuations...
Perhaps not a direct answer to your question, but I share the same concerns and never really found a perfect solution to it.
I have one single account though that holds all type of financial instruments and with one single broker.
I trade a variety of international instruments too: futures, options, stocks, and forex, obviously in different currencies to complicate things a bit...
My base currency is the euro, but I ended up with gains in all the majors (USD, EUR, GBP, JPY, AUD, CAD, CHF) that I did not bother to convert back to Eur. I found it personally better to have my account base currency in the currency I deal with with my government for tax purposes. All my statements, reports, certificates, and so on are issued in the base currency - at least with my broker they are, so that makes it easy on the administrative part.
But I don't really know what is ultimately more important: purchasing power in my local currency (i.e. EUR), or purchasing power overall worldwide? Because the first would push me into converting a currency back to euro when it is most convenient, while the second approach would make me hunt for the strongest currency of the moment and convert everything to it whenever appropriate... Do I make sense here? Hehehe
However, As of now, I do not convert any gain made in any currency, it just sits segregated in the account.
I say to myself, this is a bit of an auto self hedging, in the end we don't really know which country (if any) will win this currency war taking place as of late.
I remain very eager to read other traders' tricks and recommendations too.
Thanks for the thread.
Successful people will do what unsuccessful people won't or can't do!
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My understanding is that your broker has to convert parts of your account into USD or EUR if you trade US or EUR markets, respectively (segregated accounts). Hence, it cannot stay in GBP. Check your broker statements, you should see that there.
So, because of the above, you will expose yourself to currency risk compared to GBP anyways. If you want to hedge that you would need a separate GBP account.
On the other hand, if you have other income in GBP you can view your futures account as a diversification in currencies, which is not a bad thing (especially nowadays).
The topic which @Daytrader999 raises is another one. It is annoying, if you have segregated accounts with different currencies (e.g. USD and EUR) as your equity (in USD) is constantly fluctuating a little bit and you cannot reconcile precisely with your P&L from trading. At the beginning that drove me crazy, but I got used to it.
But that reminds me to call my broker and ask for switching my whole account to USD only (no segregated EUR amount) as I will trade the US index futures anyways in the near future (hence, no EUR needed anymore). If the whole account is in USD there shouldn't be any fluctuations due to fx changes and reconciliation should be easy.
Last edited by karoshiman; May 12th, 2013 at 12:59 AM.
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