How would you trade, for example, USD/AUD with a GBP account?

[Vrothdar]

Well after a couple of months of messing with charts and all sorts I've realised that before I do any of that I need to find a market I truly understand. Forex seems to be a good candidate however there is one thing that I'm uncertain of.

Lets say I open an account in GBP. If I'm trading a pair with GBP in I can work out my win/loss in GBP, that's fine. But what if I'm trading a pair such as USD/AUD. If I sucessfully went long and was up $100 would I be up in £s by the current cable rate * $100?

If the above is correct surely it's only worth me trading pairs that include the GBP unless I'm forming a cross pair?

 

[Stuart14]

Vrothdar, if you have an account with say IG you pay for your position in £'s. Easier thinking of the pair, whatever it be, as a simple price (not a currency) and your position in pounds. ie. If you are going long USD/AUD £1 per pip, if it goes up 100 pips you make £100, if it goes down 100 pips you lose £100. Not sure you need to currency convert for your own positions?

 

[Vrothdar]

I'm talking about DMA here. I expect I'd spreadbet initially but I'd like to understand how it'd work should I get to a position where DMA is worthwhile as I'd not like to be spreadbetting in a way that wouldn't work with broker and GBP account.

 

[Vrothdar]

Anybody able to explain this? Does my question make sense or should I rephrase it?

 

[Rhody Trader]

When you do a trade in a pair which doesn't include your account currency the profits/losses will be converted from the base currency of the pair you're trading into your account currency. That means if you were trading EUR/USD your trade results would be in EUR (or USD, it doesn't really matter), but then get converted to GBP via the EUR/GBP (or GBP/USD) rate. As such, changes in the exchange rate between GBP and the base currency will impact your final profit/loss, though it will never turn a loss into a profit or vice versa.

 

[Vrothdar]

Couldn't have asked for a better explanation. Thank you