Open an Account in the USA?

Hi everyone

I leave in the UK. I trade form an ISA account (interest free account), the money that I have to trade is £5000.

About a week ago a made a trade in a US stock and I was so happy because I made a profit small but a $200 profit, then when I sold the shares and then I realised that I have lost £150 I said again to make it clear 150 british pounds.

I realized that I have lost the money beacuse of the exchange rate, I should have thought about that but as starter I make my mistakes. I spoke with my broker and he told me that automatically I would loose 3%, 1.5% when I bought and the other 1.5% when I sold and that without considereng the fluctuations on the actual exchange rate.

He told me that If I had a normal trading account instead of the interest free that I have I could exchange the money in to dollars and when I traded left the money in dollars.

Anyway I thought that if open a normal trading account it would be better to do it with an US broker like zecco and so on since the trades will be cheaper.

Please I would like to know if I will have any problems and if anyone has a better solution also how will it work out the taxes

Thanks

Options;
1. Buy dollars and hedge the position in a Forex account (retail)
2. Buying dollars will still incur a currency exposure all the time, therefore the alternative option of only being exposed when your in a trade would seem more suitable to me... If you make $200 and lose $200 in currency exposure while in a trade, then if you held dollars, then your dollars had also lost $200 on the pound - Eitherway, its the same exposure.
3. Don't trade US

Personally, in my Pound-denominated account, i buy US instruments on margin; This effectively means i'm borrowing the dollars and am charged an interest rate rather than exchanging my money to dollars and then exchanging them back in the end. If i borrow $200 and that becomes $100 - I obviously owe them $100 and they then do that @ the current exchange rate. However if i make $1... Its never going to be a loss...

So i borrow $200, if i lose the trade and sell @ $100, they will take the equivalent of $100 at the current exchange rate of my account.

You need margin or a hedged Us account to conclude, however i would recommend keeping your ISA - Don't take money out your ISA, tax-advantages are important despite the commisions however if you take it out you will lose that. Within as ISA you can trade Funds, pretty much commision free and then its tax-free and you don't want to lose that! So if you need to take money out to open a new brokerage account; don't take it all out.

Look for brokers offering lowest commisions too; don't think that because its better than your ISA account its a bargain... ISA account commisions for shares are ridiculous so you have a bad basis for what is 'good'... Try interactivebrokers.co.uk and remember that if you want to trade US equities; their are laws regarding pattern day-trading.

x

Thanks for the response, is the response that I was looking for although it seams complicated.

I will look into it.

Thanks again