Hi there... I'm a Canadian that trades US equities and I'm struggling to make a decision here. For the past few yrs I had a relatively small account (under 100k) so I wasn't OVERLY concerned about about currency my acct was held in. I have since done very well in the market and my account is substantially higher and I'm trying to figure out what currency I should hold my account in. I'm not trying to make a currency call here, but it got very frusturating having my account in US dollars and seeing my balance getting killed on Canadian $ rallies considering I live in Canada, pay all my bills in Canadian $'s and it seemed senseless to me. What do other Canadians trading US equities do? Thanks
Well, you're approaching or at a 'going negatitive' exchange rate + associated transfer/banking costs point, what are you going to do ? Trade the TSE ?
I have the same issue here, and I refuse to trade anything other than the US markets (well, maybe some european futures). Even if my account is denominated in Canadian dollars, will I lose money by constantly exchanging money for each trade? I'm with IB, and I have no idea... Maybe we can hedge it by carrying a Canadian dollars futures contract?
When I leverage up with big size on a trade I rarely hold on for more than 1 hour so I'm not overly concerned about fluctuations WHILE I'm actually in a position but it seems like this is a complicated topic and there may not be an easy answer.
You are right when you say that there are no easy answers. One thing to consider is the interest rate differential. Right now USD yields a bit more but you broker's interest rate hair cuts might eat that up. Don't forget that you are a trader. If you are with IB and your account is worth about 75,000 US than you could look at it a having three lots to trade. You could come up with a strategy and trade it without using a stop loss-just accept that you now own the other currency. Just trade one lot at a time and when you system stops working just wait for it to come back
As a Canadian with a $US account you are essentially long the USD/CAD by an amount equal to your account balance. If you wish to hedge your currency risk, buy one CAD (CME globex) future for every ~90K $US in your account. Now, if the CAD goes back down to $0.65, you'll be wishing you had never asked......
My suggestion to you: If you like trading in Currency: You can do the following during the Month of July: Buy Yen in other words Short USD/Yen because it's expected on Yen to go from 115 up to range 111 during July-06. Also if your account could permit, take both Euro and GBP long compare to USD, meaning take Euro/USD and GBP/USD long. If you are interested in US-Based Companies shares, I suggest to you investing in Mineral and Gold and Oil exploration companies. In addition to some companies called Non Oil substitution energy or non traditional energy producer companies. Third option: I think during this month and may be during the follower, most US based Indices, Dow, NASDAQ and S&P will drop in values, hence I recommend to you to shorting Dow on range of 11150 till 10800. You may do the same for other indices. For more Information on Currency, Gold and Oil please visit my subject under this forum: http://www.elitetrader.com/vb/showthread.php?s=&threadid=71997
I have no interest in trading or predicting currency movements, I'm not good, nor do I claim to be good at it. The reason for this post was to find a way to completely avoid speculating. I'm thinking that maybe the best way to be as neutral as possible is to have half my currency in CAD and half in USD. Basically the problem is this. If I hold Canadian dollars and the CAD falls then my buying power for US stocks goes does therefore my profit goes down. If I hold USD and the USD falls, then my account just sitting there loses money. I think I will still continue to hold Canadian $'s because I'm a fairly infrequent trader so it's not like the conversion is happening all the time, however, I'm going to consider the possibility of half USD half CAD. Any thoughts?