When is it better to trade (if the broker allows this) in an oversees market such as Japan with U.S. dollars versus the yen? I now that some brokerage firms give you the option of staying with dollars or converting it to Yen.
if you expect dollars to appreciate and you make money as a trader while they do, you'll be earning cheap dollars that will presumably be gaining in value at the same time you're making them
It always better to trade local currency. Brokers which do not have multi-currency system change high currency conversion fees on every transaction. If you want to trade internationally it is also important that the broker has good exchange rates.
So would I be correct to infer that trading in dollars now (in a foreign exchange) would not be a great idea because the dollar keeps getting weaker?
in general that's been the right side for the last 5 years against most assets. although the dollar now sits relatively close to the historical bottom of it's range so it's tricky to commit without more information contrary to most western currencies, in this particular case the yen is depreciating against the dollar so actually if you intend to be a monetary trend follower dollars might be more attractive (independent of whatever transaction costs apply)
Idealpro rates are usually excellent during active trading hours. Major currencies have good volume and spread is really minimal. Idealpro is marketplace for currencies and rates between major currencies are not dependent on IB's marketmaking. In IDEAL rates vary a lot. ie. USD/EUR and USD/JPY usually offer good rates in IDEAL too. But if you want buy small amount of some minor currency like USD/SEK pair you can find some really bad offers. (Beware of "close all non base currency positions" option if you have positions of small currencies!) If you buy foreign (non-US) stocks with cash the trading currency does not really mean anything. You are still vulnerable to currency risk. Ie. Nokia is traded in Helsinki stock exchange(OMXH) as well as in NYSE. But value of Nokia stock in dollars in NYSE is dependent on exchange rate of USD/EUR while Nokia's major customer market is outside US and most of Nokia stocks are traded in EUR. Sure you can eliminate some currency risk if you take margin loan in non-USD currency to buy securities traded in the same currency.