The base currency on IB

T

traderwald

Hi guys,

1. How do you keep the currency in USD at IB, if you do deposit in other base currency ?

The currency fluctuations is causing some confusions and want to keep that simple to concentrate on trading rather than do a trade in stock or ES Futs or something else and also look at the currency fluctuations for this due to base currency being other than USD in the account.

I find that the currency is part in USD and part others. Why is that ?

2. Also, which is better to keep it USD or others ?



Thank you
 
ZBZB said:
Sell the other currency and buy dollars.
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Do you mean buy the USD in the cash market ? If I do that how would I keep it in the account ? It would all be in the trade till trade is closed.

Or could I send IB the request to keep the currency in USD even though the base currency that I deposited is other currency for this ?

Thank you
 
There are some very good videos on this at IB. It goes through with examples on what happens when you have a base currency and buy an instrument based in another, and when you sell. Also they cover how multiple currencies are held in your account. And they cover how to convert using the pairs. There is a lot to cover and it can be confusing. I suggest you go over them all and try them in the sim.

As for which to hold, now you are going into FOREX territory, which you just need to learn about currency pairs and look at the charts because basically you are trading currencies at that point.
 
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traderwald said:
I find that the currency is part in USD and part others. Why is that ?
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Your IB account is a multi-currency account. IB will not convert cash positions from one currency to another. That is something you need to do yourself, by placing currency trades.

The "base currency" is only relevant for reporting purposes: it shows the values of all activities in the chosen currency. It has no influence at all over your cash positions and the currencies those positions are in.
 
So does it mean the currency does get converted during trading. For example if the deposit currency was not in USD and trading was done in USD based symbol for example ES Futs contracts, then would there be no currency conversion in order happening behind the scenes for this trade to occur ?

Thank you
 
traderwald said:
So does it mean the currency does get converted during trading. For example if the deposit currency was not in USD and trading was done in USD based symbol for example ES Futs contracts, then would there be no currency conversion in order happening behind the scenes for this trade to occur ?
More...
No currency will get converted during trading. Let's take an example: you have 10,000 EUR cash in your account. And decide to buy Tesla stock in the US. This stock denominates in USD. You buy 4,000 USD worth of Tesla stock. After this trade your account has the following overview:
Tesla stock 4,000 USD
EUR cash 10,000 EUR
USD cash -4,000 USD
The result is that you have borrowed 4000 USD from IB.
You now have a choice: either keep this negative USD cash position until you close the Tesla position. Or execute a forex trade to convert some of your EUR cash into USD cash.

The situation with futures such as ES is different: you don't pay with cash when you open a position. Instead, IB takes a collateral, which is not shown as a cash position. The only cash change that you will notice after the trade is a small negative USD cash position due to the commission of the trade.
 
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