Forex when your Account currency is different to the ticker currency

Squished_bunny

Newbie
2 0
A very newbie question...

If I'm trading GBPUSD, it's tickered on the USD... meaning if I buy 1 unit of GBP the rate I pay in USD is the rate on the chart. Going long & short on the GBPUSD with a USD Account all makes sense to me. Where I'm getting confused is if my account is in GBP! For example if I go long GBPUSD, my broker converts 1GBP into 1.6USD and then buys 1GBP using the 1.6USD..... Net - wise I'm effectively already long GBPUSD before & after the trade as my account is in GBP, but my broker has made a nice commission on the trade. :rolleyes:
Going short is somewhat more clear, as I'm selling GBP to buy USD.

If I trade both Long & Short GBPUSD...should I just convert my GBP Account to be USD based, or doesn't it matter?
 
Last edited:

Rhody Trader

Senior member
2,620 265
Your broker isn't converting your account currency into anything when you do a trade. There is no actual currency exchange taking place. When entering a position you are making an agreement to do an exchange in 2 business days, but as positions are rolled forward each day you never actually get to the point where you do the exchange. You are simply gaining or losing the change in value of the position you have on. That gain/loss may need to be converted back into your account currency, but that's the only conversion done.
 
 
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