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Discussions about brokerage firms for futures, stocks and other tradeable instruments.
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Bernd
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;-)

Post by Bernd » Fri Dec 19, 2003 7:52 am

:wink:
Last edited by Bernd on Fri Apr 18, 2008 2:52 am, edited 2 times in total.

Douglas
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Post by Douglas » Mon Dec 22, 2003 1:22 pm

Bernd,

Check out IB's website, you'll find that you trade assets in other currencies on credit. You can increase/decrease the balance by buying lump sums of IDEAL currencies.

If you buy US assets, but have no USD you'll borrow the money from IB. If you make a profit when you close out the trade, your USD balance will be positive. Likewise if you've got a loss, it'll be negative.

If you've got large gains you can convert your USD to EURO for a fee. If you've got large losses, you may consider buying up some USD to lessen the interest charges (also listed on the site).

Of course the rate at which you convert changes over time, because that is what markets do. Perhaps you could consider trend following the Euro as part of your overall strategy.

Cheers,
Douglas

-w.
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Post by -w. » Tue Dec 23, 2003 3:41 am

Douglas wrote:If you buy US assets, but have no USD you'll borrow the money from IB. If you make a profit when you close out the trade, your USD balance will be positive. Likewise if you've got a loss, it'll be negative.
Bernd,

but be aware of the fact that while you hold the position, USD interest charges for the full position will apply while you earn interest on your Euro credit balance. The interest differential might be positive at times but when the broker's spreads are added/substracted (on both sides!) you pay a lot of money. Just converting as you need it usually is much cheaper.

In addition to Douglas' suggestion to trend-follow the Euro (which I think is a very good idea) you might want to hedge your currency exposure separetely using FX forwards. Just estimate the portfolio exposure you expect to have over a given time-frame and take out currency risk by buying USD at a fixed rate and fixed term. The only cost will again be the interest differential (which can also be positive, so you actually "get paid"), but it is built into the quote and you only pay the relatively low forex-spread.

Of course, your estimate of USD exposure can turn out to be wrong, if only for market movements, and you will probably end up over- or under-hedged. But still this is the way most portfolio managers usually do it.

Another thought: some people also like to use European style currency options for hedging purposes. Not only is this quite expensive but usually those "hedging strategies" quickly become outright speculation :roll:

-wojo

Bernd
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Post by Bernd » Thu Jan 01, 2004 1:58 pm

:wink:
Last edited by Bernd on Fri Apr 18, 2008 2:52 am, edited 1 time in total.

Douglas
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Post by Douglas » Thu Jan 01, 2004 6:12 pm

Sell Short is for opening a short position in a shortable stock. You can't short sell futures, you simply "Sell". Hence the dual option for opening a position.

When you close a long position, you simply "Sell". THis is why there is only the "Sell" option below the market line. You cannot close a long position by Selling it short - by definition when you own the stock you have it in your portfolio thus you are not short it.

Cheers

D

Bernd
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Post by Bernd » Fri Jan 02, 2004 1:52 pm

:wink:
Last edited by Bernd on Fri Apr 18, 2008 2:52 am, edited 1 time in total.

Bernd
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Post by Bernd » Mon Jan 05, 2004 3:23 am

:wink:

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