ATTN Naz traders. Dollar accounts?

How do all those traders who trade the Nasdaq (or any other foreign currency driven market) regularly transfer their money back to their UK current account without incurring hefty charges?

Do you have a dollar account which your US broker will transfers to, and then exchange it for sterling in your UK account? Or is there such thing as a dual account which you can withdraw/transfer money in any currency without a huge charge?

TIA

CH

Captain Haddock said:

How do all those traders who trade the Nasdaq (or any other foreign currency driven market) regularly transfer their money back to their UK current account without incurring hefty charges?

Do you have a dollar account which your US broker will transfers to, and then exchange it for sterling in your UK account? Or is there such thing as a dual account which you can withdraw/transfer money in any currency without a huge charge?

TIA

CH

Click to expand...

Hiya CH

I think a lot of people on here use IB and this allows the account to be sterling denominated, with any P&L resulting from trades being converted into sterling at the current spot rate. Someone like Trader333 can answer in more detail.

Would be interested to see what others do who use other brokers though.

Stew

Any more info guys?

Some brokers, such as Interactive Brokers, give you the option of choosing the base currency of your account. So you can opt for US dollars, Euros, Pounds sterling, Swiss francs, etc.

Which you choose is up to you, and won't make any difference to your trading. Transferring funds within your account into different currencies is done easily and cheaply via IB's IDEAL FX exchange, so the only thing you really need to consider is the cost of transferring funds into and out of your account. And it is for this reason that most people seem to opt for a GBP base currency account.

I traded CFDs for a while on the Nasdaq with a sterling account. Maybe it was just a bit lazy, but I worked it in sterling and let the broker make the exchanges as needed.

For me there was nothing to do or any confusion. I took a position on a US stock, the broker worked out what that was in £ and subtracted that from my account.

Money back into the account was the same, when I made my $3 gains (ha ha ha ha!) the broker calculated what that was in sterling and paid me in sterling.

It was all instant and painless.

Of course, there is nothing at all to stop you from opening a US$ account with a UK broker or even one of the US brokers who accepts UK customers. Just use a bank account (rather than a building society) and you can transfer funds back and forth. It's not that difficult either, banks are accustomed to dealing in multiple currencies these days, we have a very small world.

For example

If I had a GBP account with IB, every time I traded Emini's they would have to convert my margin to USD?

Am I right in thinking....

a) I am only liable to beneficial or adverse cable movements while I hold open positions, ie while I have money in USD to cover margin requirements.

b) If I traded 20 times in one day , would IB transfer GBP to USD and back again 20 times to cover my margin requirements. Would they charge a commission every time they converted currencies?

c) Does any realised P&L stay in USD until I have used IDEAL to convert it back to GBP?

If anyones interested:

I opened a daytrading account with realfasttrader and got my high street bank to transfer the funds over in dollars (with a bit of haggling over the exchange rate) Its not an ideal way to make regular transfers as the rate is so poor, but it will suffice for the initial funding.

Good points Daniel.

If funds are transferred for each trade then you're paying the FX spread twice per trade (buy/sell). I dont know whether IB also charge for each transfer. This would make scalping pretty expensive!! and favour longer term trades.

Can anybody expand on this. Thanks in advance.

lwebb,

Thanks to Knorrie for responding to my comments on another thread.... ( http://www.trade2win.com/boards/showthread.php?p=126588#post126588 )

"No, the other way round. They convert the $ margin requirement for ES to £ based on the ex. rate at the time and do all the margin calculations in your base currency (£).

a) Your overall account value (value of £ account, value of $ account and value of open positions) is converted to £ to calculate margin requirements. You see this fluctuate in real time as the exchange rate moves!

b) No they don't charge commission for these currency margin loans. If you close all your positions by the end of day, you don't get charged anything, all you see is your gain/loss in the $ account at the end of the day. If you leave positions open overnight you will pay interest.

c) Yes

KenN"

Just an idea but would it not make sense to have a UK based trading account going short US dollars at the same time as opening a dollar based US based trading account

If you have an IB account this is not necessary because you can keep your account in GBP and still trade US equities. However if you were that concerned with USD/GBP Exchange rates then you could convert half your account to USD and therefore offset some of the impact of changes in Exchange rates.


Paul

Paul, if you have an account with IB and your base currency is GBP, doe's this mean that you don't have to convert GBP into USD to trade nasdaq stock ?
sorry if it seems a stupid question, but I'm a little confused,

All replys welcome..................thanks

WG,

..........doe's this mean that you don't have to convert GBP into USD to trade nasdaq stock ?

Click to expand...

Correct, although when you become profitable what happens is that you build up profits in USD. At some point you would then convert them back to GBP which is very inexpensive to do.


Paul

OK, thanks paul...............

Regards, john

I know it was a while since the initial question was asked, but I though that I would follow up with another post to help anyone else looking through the forum for information on this issue...

I recently opened an account with Trade Station (the broker and software company). They are a US broker, so want funding in US$. I simply went to my bank, well building society actually, and transfered money from my account directly into Trade Station's bank.

In the US, this is called 'Wire Transfer', my UK building society call it 'SWIFT transfer'.

Looking at the rate they gave me and comparing it to the rate at that time of the day on a forex chart, I believe they gave me the current 'Interbank' rate.

There was a charge for the SWIFT transfer - £20. But, considering that this was an initial funding for a pattern day trading account, the £20 is not a sizable fee.

The transfer process was simple and fast. I initiated the transfer at about 9.30am UK time and I got an e-mail from Tradestation at about 11.00pm that night saying that they had received my transfer.

As I feel that the value of the dollar could well drop even further against the pound, I may hedge my account by shorting the £/$ in my spread bet account (I don't have a dedicated forex account).

When receiving funds from my trading account into my UK account, I can have them transfered in a similar way. Yes, I do need to think about the current value of the dollar against the pound, but as I said, I may hedge against fluctuations with my spread bet account.

Is there a cost to transfer funds back to your own currency account and if so how much is it ?


Paul

Yes, sadly

As an international account, there is a $35 wire charge from Tradestation. Nothing from my bank though.

Just to confirm, the £20 charge I mentioned to fund the account - that charge was from my bank, Tradestation do not charge for receiving money.