I'm a Canadian trader who trades US equities and I'm just getting killed daily with the fall of the $USD. Assuming I have $200k open positions denominated in US dollars, every day the USD drops 1% compared to the CAD (which seems like almost every day now) I lose $2000. Is there any way I can hedge this?
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How to hedge the $USD?
- Thread starter drukes1234
- Start date
Quote from drukes1234:
I'm a Canadian trader who trades US equities and I'm just getting killed daily with the fall of the $USD. Assuming I have $200k open positions denominated in US dollars, every day the USD drops 1% compared to the CAD (which seems like almost every day now) I lose $2000. Is there any way I can hedge this?
You can go short the USD everytime you're long US equities - use an account at Oanda if you want to be able to hedge the exact dollar amount, though approximating it does just fine. The biggest issue you'll have is A) it's a pain in the ass, and B) the spread on the USDCAD is kind of high... you can trade through a forex ecn, etc. but they aren't interested in your odd lots of dollars. You could hedge with the Euro; if you're hedging $100,000 worth of US equities, the spread on one lot of US dollars against Canadian dollars will be $40, but only $10 with the Euro.
I would just find a broker where you can keep as little of a deposit as is possible and just use their leverage and accept the fact that the US dollar is going down the shitter... and convert your winnings into a basket of currencies daily.
I appreciate the prompt reply. I was thinking of possibly just going long a Euro or Canadian dollar futures contract. Although not a perfect hedge, it's atleast something. Is there a mini Canadian contract like there is a mini Euro contract?
How much interest would I get charged on the USD/CAD short?
About $1.50=C$1.50 a day per 100K lot. Less than any spread or commish.
But... you do realize that as soon as you put your nice hedge in place, the looney will retrace 450-600 pips, as if on cue.
The currency floating loss will be offset by the extra gains on your equities P/L, but, because of leverage, it'll still hurt...
But... you do realize that as soon as you put your nice hedge in place, the looney will retrace 450-600 pips, as if on cue.
The currency floating loss will be offset by the extra gains on your equities P/L, but, because of leverage, it'll still hurt...
Exactly.. the short USD hedge makes sense only if there was no margin penatly -- I still don't know what to do
By doing what Daal, buying the CAD futures? Right now based on the positions I currently hold in USD that would over expose myself to the CAD