IB account. Pounds or dollars?!

[seancass]

My IB account is currently funded in pounds sterling as the base currency. However, if I want to trade US stocks does IB take the required margin and convert it to dollars at the current rate and then change the profit or loss back to sterling when the trade is closed?

If I am going to trade US stocks solely then is it better that I keep all of the funds in dollars?

Thanks

 

[Jack o'Clubs]

Basically, yes. But because they do the conversions at market rate it's unlikely you could fund and make transfers in and out of a dollar account as cheaply, unless you already have a dollar account and income in $. If you're worried about longer term $/£ movements eroding the value of your portfolio you could always take out a currency hedge to compensate.

 

[henry766]

jack of clubs , when they convert each time for a us doller trade , do they have a spread in thier "market rate " surley that would be an expensive way of trading u.s. stocks ?

 

[Jack o'Clubs]

Conversion rates are calculated on my daily statement, with a credit/debit applied depending on the $ positions I have open and the rate move during the day. Looking at the rate applied it looks like the mid-point of the three-pip cable spread.

 

[seancass]

Conversion rates are calculated on my daily statement, with a credit/debit applied depending on the $ positions I have open and the rate move during the day. Looking at the rate applied it looks like the mid-point of the three-pip cable spread.

Thanks Jack o' Clubs.
So what you are saying is deposit the money in a dollar account?

Sean

 

[Jack o'Clubs]

er, no, in a sterling account unless you've got an income source in dollars. I would phone them and ask them, as that might be better than taking the advice of one person on an internet forum?

 

[seancass]

er, no, in a sterling account unless you've got an income source in dollars. I would phone them and ask them, as that might be better than taking the advice of one person on an internet forum?

Yes, I'll call them. Thanks for the input.

Sean

 

[Directional]

bear in mind that the dollar has been trending down the toilet against GBP, if the trend is your friend do you really want your account balance held in $$ if you pay your bills in ££?

Seriously, if you just have a $10k account at IB in USD, you're basically long the dollar vs cable in one FX mini-lot for the whole time you're account remains funded.

not the sort of FX exposure I'd be too comfortable with

 

[TGM]

bear in mind that the dollar has been trending down the toilet against GBP, if the trend is your friend do you really want your account balance held in $$ if you pay your bills in ££?

Seriously, if you just have a $10k account at IB in USD, you're basically long the dollar vs cable in one FX mini-lot for the whole time you're account remains funded.

not the sort of FX exposure I'd be too comfortable with

True but you have to remember that you can hedge it buy buying as much or as little Cable as you would like for a hedge. They are cross currency accounts. You can hold money in any currency they traffic in. Or you can just open up a Cable account. But it is very easy to stay hedged at IB. Much easier actually than a traditional $ futures brokerage---were you have to just hedge using futures. Some of the other brokerages (like Fimat, Advantage) are more and more allowing currency switching and holding accounts in other currencies (thank gawd). But IB is easy to hedge with .....just go long 17,500 worth of Cable.....you will be golden and then some.

 

[seancass]

True but you have to remember that you can hedge it buy buying as much or as little Cable as you would like for a hedge. They are cross currency accounts. You can hold money in any currency they traffic in. Or you can just open up a Cable account. But it is very easy to stay hedged at IB. Much easier actually than a traditional $ futures brokerage---were you have to just hedge using futures. Some of the other brokerages (like Fimat, Advantage) are more and more allowing currency switching and holding accounts in other currencies (thank gawd). But IB is easy to hedge with .....just go long 17,500 worth of Cable.....you will be golden and then some.

Thanks for the input. Interesting.
Sean