An In Depth Discussion About Margin

The advantage of a margin loan is that the holder only exposes himself to fx risk of the pnl portion. The broker loans the purchase price/margin/...and that goes back to the broker upon liquidation. The difference is exposed to fx risk. Same as a house purchase on mortgage in foreign currency. The fx risk is not applied to the house value but to the realized pnl upon sale.

cruisecontrol said:
You have to do the math, but generally futures will have better implied interest rates than what a broker will give you, even IB. The question is, is it worth the extra risk/complexity/effort of rolling contracts, the extra margin use, etc. When I last evaluated this question, the answer for me personally was no.
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GRULSTMRNN said:
The advantage of a margin loan is that the holder only exposes himself to fx risk of the pnl portion. The broker loans the purchase price/margin/...and that goes back to the broker upon liquidation. The difference is exposed to fx risk. Same as a house purchase on mortgage in foreign currency. The fx risk is not applied to the house value but to the realized pnl upon sale.
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Advantage compared to what, being unhedged? OP is using futures to hedge his FX risk. This should give basically the same results as a margin loan shouldn't it?
 
Stockolio said:
Yea it doesn't make sense to pay interest on your main trading currency... Please explain this, I wanna understand your thought process on this :

At the same time we do not want currency risk so we decide to go long 1 CAD future contract which has a settlement of 100k CAD.
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Dumbass.com ?
 
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