ACCOUNT BASE CURRENCY CAN AFFECT PROFITS !

CrazyTrader posted:
It reminds me 2 years ago when some smart people from Switzerland came to France to open account into € while EURCHF was around 1.0000.

They got 20% thanks to Forex without trading it o_O

lihkin posted:
When we execute trades in the fx pair spot market we earn profits in various currencies such as euro, usd, yen, pound etc.

But then these profits are converted to the accounts base currency. while converting the exchange rates apply, and we pay spread! !! !!!

That means if u earn profit in cad, u pay spread for gbp/cad if ur accounts base currency is usd, its the best until usd is not falling down.

Any ideas/ views on this friends

dvejn posted:
small? for 1000 trade and example spread 3 pip? 3000 pip. yes. small. for many people is 3000 pip very big profit.

AndyQuant posted:
It easier said that done,be advised that some broker will apply awful prices when sending you withdrawals in different currencies, or you have to deal with your bank, I make an example..

You put 1000 EUR in a USD account,the spot quote is 1.3000(pure examples here) the deposit is processed by a third party financial istitution which gives you this price 1.2930 (i have seen even -150 pips commission), so on your platform you have now 1293.00 dollars for trading.
In the following weeks EUR strenghtens against USD of 200 pips,so spot price is 1.3200 (or can either loose) and you managed to make some profits, let's say 100 USD, and want to withdraw to buy GTA5 (how often you withdraw your profits?).

Your broker has Sbrillz-MoneyLaunders (purely invented) for processing outgoing money, they charge you with a 2.5% commission and give you the 1.3050 quote for swapping usd to eur, so 100-2.5= 97.5, now apply the reversed quote 97,5*76,66= 74EUR.

Ive seen worser conditions than those decribed, read carefully broker intercurrency transfer policy, fees, and third party istitutions.
They will play hard on price so this strategy is profitable only on long term big moves and obviously only when the currency is stronger..

FXdiversified posted:
well if you trade for living or at least for improving the conditions of living :-) use the currency you need in your daily life as base currency (at least G7). Demoaccounts and $50 heros do not need think about this problem at all. (I know especially these people love to calculate irrelevant cost)

All these cost mentioned above are just part of the game and it is up to you to select the appropriate broker. this one should be at least as trustworthy as you bank you use on daily basis.

And some answers... well, i guess it is a dangerous business for some people...

FXdiversified posted:
sure that's right and it is not.....but there is a simple approach to that, a management structure requires a certain set-up. To realize that might be the first step to enter serious trading.

Some basics are helpful as well:

-Base currency should be the currency of daily needs (as i mentioned)
-Swap-cost are related to your P/L. (if not in your base currency).
-you can hedge your base in many ways if you think it is necessary


Unfortunately the comparison to physical exchange is as helpful as comparing $50 to $1000k accounts.

There is not that much to say about your calculation above... it is definitely right. If you take a brokerage with low spread and a $ 100 gift for opening the account or you open a very small account with an investment bank you can perfectly calculate that something is wrong and these people will get their money back and more.... do you really need to calculate this?



i think an appropriate brokerage company that means a solid, fully regulated business will provide you with competitive solutions.
It is highly dependent on the initial investment which one should be selected.
If you take these things into consideration there is no need to calculate all the time. Thats definitely not what will improve your performance.

And if you have a $1mio account you might find it easier to negotiate certain things.