Hedging Against Currency Risk in Foreign Stocks

[Cut Throat Jake]

Hello,

I'm a UK resident and I've started trading US stocks and quickly run in to the problem of Currency Risk. I was beginning to make a decent profit, then Sterling takes off and wipes out all my gains.

Is there a cheap and easy way to eliminate this currency risk e.g by purchasing GBP/USD currency pairs?

Are there any products available for individual investors which will automatically hedge your protfolio in this respect, or at least enable you to do this in a not too time consuming way?

Suggestions welcome

Many thanks

 

[Waterfield]

Yes; There's a thread here about it Guarding Against Strengthening Sterling.

I would argue that SB is a viable option for the following reasons;

Very very low margin requirements meaning you can use more capital to invest in stocks.
Easy to calculate Stake size.
Low requirements for opening an account.
Make sure you use the futures so you don't pay interest daily.
Tax Free.

After rereading your post. I would try and get in contact with your broker and see if they could do it. I don't know of an application but there might be one out there.

Hope this helps!

Phil

 

[Cut Throat Jake]

Yes; There's a thread here about it Guarding Against Strengthening Sterling.

I would argue that SB is a viable option for the following reasons;

Very very low margin requirements meaning you can use more capital to invest in stocks.
Easy to calculate Stake size.
Low requirements for opening an account.
Make sure you use the futures so you don't pay interest daily.
Tax Free.

After rereading your post. I would try and get in contact with your broker and see if they could do it. I don't know of an application but there might be one out there.

Hope this helps!

Phil

Thanks for the quick reply, that definately helps. I'll check with a few brokers also, to see what they offer.

Can anyone recommend any books which cover this topic?

Cheers
CTJ

 

[Waterfield]

Just another quicky -

http://en.wikipedia.org/wiki/Hedge_(finance)#Hedging_currency_risk

http://www.retailinvestor.org/hedge.html

They're in my bookmarks, so must have been helpful .