Account Currency not equal to Base or Counter Currency
I cannot find infos on the currency risk in the following situation:
Spot Contract USD.CHF with 100.000 units
Where do I have a currency risk?
Obviously in the pair USD.CHF. No question about this.
But how about the currency risk between Base currency (here: USD) and account currency (here:EUR)?
Will it affect only the profit/loss value resulting from the position or the whole 100.000 units as as well?
If you have a long position USD.CHF you will make a profit, if USD moves up against CHF and a loss, if USD moves down against the CHF. This position is not related to the Euro except if you think that the CHF moves in lockstep with EUR.
The USD.CHF position is identical with the combination of
- a long position USD.EUR
- and a short position CHF.EUR
The Euro risk cancels out.
Where the Euro comes into play is, when you convert your gains or losses.
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