Dollars or Pounds?

[seancass]

Can someone please advise?

I understand that in the process of opening an account with IB I will be required to choose a 'base currency.' There are obvious implications for my money when I consider the effects of exchange rates etc.

What is the advice of members? Open the account in dollars or GBP? Eh, that's if they give me the choice!

Secondly, is the process of application to open a PDT account as ghastly as people say? I hear it's a long protracted journey to completion.

Best wishes,
SeanC

 

[Trader333]

Sean,

Open your account in GBP and then if you are concerned about exchange rates (as I was and still am), change half your account in USD. I did this and the cost was only about £2 and it is easy to do. What happens to me now is that I only get half the effect of exchange rate changes which is good.

When you make a good profit in dollars from trading you just sell a number of dollars back to GBP and withdraw them.

This is the best option by far as the conversion is at the actual exchange rate + a few 100ths. If you have an account in USD then converting back to GBP is very costly. I looked into this and it is not worth considering.

If you decide to do this let me know as I made a mistake initially and ended up buying about 15000 GBP by accident but once you know how it is dead easy.


Also opening a PDT account is a pain but not too bad.


Cheers


Paul

 

[Oldun]

Sean,

I think its right to say it does not really matter. On the one hand, if you are trading US stocks exclusively there is a certain neatness in having your account in dollars but you will have to withdraw your profits (and finance any losses) in dollars. On the other, provided your GBP funding is sufficient to take account of currency fluctuations IB will convert to dollars for the purpose of your trades and you can withdraw in the currency of your place of residence.

Not much help I know but you makes your choice ...

 

[Oldun]

Paul,

You and I posted almost simultaneously.

Very interested in your solution, elucidation would be appreciated.

Regards

 

[Trader333]

Oldun,

What specifically do you want to know ?


Paul

 

[seancass]

Paul and Oldun,

Thank you for that. Plenty to think about over the coming fortnight as I begin to paper trade Mr. Charts' methods and techniques in preparation for the big push forward!

It was Skim who first alerted me to the need for consideration of the exchange rates when opening an account with IB.

Thanks again.

Sean

 

[Oldun]

Paul,

How to convert a portion of the GBP account into a $ account which seems like an excellent idea. Just being lazy as to working out how!

Oldun

 

[Trader333]

Oldun,

All you do is type "USD" in the underlying column as shown below. Then click on "Ask" as shown by the red arrow you will then get another screen as shown in the next post.

 

[Trader333]

Make sure that “Underlying” is USD
Make sure that “Prem. Currency” is GBP

Ensure that “Action” is Buy
Enter the number of USD you want to buy, (10,000) in this case

Hit “Transmit”

That’s it

Cheers


Paul

 

[Oldun]

Paul,

Thanks. Now I'll be watching exchange rates as well!!!!

Regards

Oldun

 

[oatman]

Seancass, That's your first trade.....£ or $.

 

[seancass]

Oatman,

Yes my first trade indeed. I can cope with dollars and pounds but.... Euros?!!

 

[Vislikke]

Make sure that “Underlying” is USD
Make sure that “Prem. Currency” is GBP

Ensure that “Action” is Buy
Enter the number of GBP you want to convert, (10,000) in this case

Hit “Transmit”

That’s it

Cheers


Paul

Paul

Did exactly as you defined here and ended up buying $10,000 as opposed to selling £10,000 as you explained.

Oh well have to trade again. The bill for $2 commission is coming to you Paul

Cheers

Mike

 

[Trader333]

Vislikke,

I thought it was clear but I guess not so I will edit it as it should have said USD. If you wanted to sell a number of GBP (something that I havent done with IB) the setup is entirely different with different underlying currency etc. to that of buying a number of dollars.

But that said I have noticed differences in the selling of GBP rate as opposed to buying of USD rate. You may well have saved a couple of USD in the conversion.


Paul

 

[ColinRiche]

Paul

If you have 50% in dollars and 50% in sterling
doesnt that mean you are hedged and not at risk
to currency fluctuations

or am i missing something