Which Base Currency; trading GBP/USD From the UK?

Hi everyone

I'm posting here as I am hoping for an answer from someone with experience.

I am entirely new to FOREX trading and slightly confused as to which base currency may be best for funding my trading account, living in the UK.

I am currently experimenting (using a demo account) with good and steady results, using an Expert Adviser. However, its money management facility assumes USD. Hence, trading, eg, with £2000, 2% risk, 0.1 lots and a 40pip stop-loss, I am finding that on losing days, because the broker converts P&L back to GBP, my actual loss is (at 1.61) £24.84. Obviously this is not 2% of £2000 and therefore my profits are commensurately reduced too.

I understand fully that this is a result of the trading currency being USD but can't decide (ie work out the consequences, if the truth be known) if I shouldn't just fund a live account, when the time comes, with USD. That way everything is in dollars and calculations are correct with the money management percentage etc.

Would somebody be kind enough to comment on the pro's and cons of doing this, and any other options?

Many thanks.

hi

i dont trade fx or ust metatrader4 at all... but is there any way you can change the ea code to make it for pounds instead of dollars?

the reason i say it is cos i think its best to keep your account based in your domestic currency... so lets say you put 2 grand sterling into your ea to start and after 6 months is only just broken even, in your mind you still have 2 grand sterling but if you convert it to dollars yoiu could have more or less depending on what cable has done in the 6 months.

so unless you have a view on what cable is going to do, avoid the risk altogether is my advice.

Hello DashRiprock

In short I agree with your sentiment. I guess the loss associated with even a relatively large change in GBP vs USD exchange rate is not going to be massive, as I keep a close eye on things but If I have understood one thing so far, it is,"manage risk, manage risk, manage risk". I'll investigate changing the EA's code.

I have considered simply increasing the %risk from 2% to (presently) @3.5% in the money management of the EA. As far as I can see this would increase my dollar investment and therefore 'adjust' the ratio of return so that a 3.5% loss in USD would equate to a 2% loss in GBP.

Unless I have got this completely wrong, I would need to keep an eye on daily rates, I think it would work. I'm only trading once a day, if conditions are right and the trades are usually closed between 1-5 hours.

Do you have any views on my comments?

Thanks for your help.