IB - hedging for f/x gain loss

O

osho67

When your base currency is GBP (example) and mostly you buy 0r sell instruments where currency is USD, you can hedge your USD exposure against your base currency.

Anybody using this facility? I would like to clarify one or two points regarding this. I will list these points for guidance if somebody is actually using this facility.

Thanks for input
 
I am not using it. The issue is that depending on your value at risk and trading frequency your hedging has to match the value at risk (at least somewhat). Now if the frequency of trades is quite high, you pay plenty of commission just to keep your hedged value around equal the value at risk.

Thus this really depends on your trading frequency and strategy if this is worth loosing the money for the hedge... .

Just my 2 cents
 
Quote from Mr_RC:

I am not using it. The issue is that depending on your value at risk and trading frequency your hedging has to match the value at risk (at least somewhat). Now if the frequency of trades is quite high, you pay plenty of commission just to keep your hedged value around equal the value at risk.

Thus this really depends on your trading frequency and strategy if this is worth loosing the money for the hedge... .

Just my 2 cents [/QUOT

I only trade US markets and make plenty of trades. Over 3 years 07-10 I have lost over £4000. I can change my base currency to USD but I want to withdraw money ib GBP. I donot know I can do that.
More...
 
Ahh right. This setting was somewhere in the IB account management.

For the details on this it's best to catch a person in the online chat - they should be able to point you in the right direction. I think the conversions are made for you on each trade and with a very minimal spread rather than commissions.

But just ask in detail in the chat - they should be able to point you to it.

Hope that helps a bit.
 
My IB base currency is USD, but I wire money to my HSBC UK account
in pounds. Cost is 7 pounds per wire. When money is wired out an automatic
loan is created, i.e. IB lends me pounds, but seemingly buying pounds using
Ideal and the virtual short currency from the automatic loan are kept separate so
I do not bother hedging.
 
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