I would like to here from some Canadian traders out there and what they are doing about this CAD$ situation. Do you just convert your money as you make it? Every month? Do you just hedge? What kind of hedge do you put on? Do you just leave it in USD? I try and keep as much as I can in CDN but I need USD in my account for overnights. Thanks, B
My accounts are all in USD. I don't actively hedge, just convert as I pull money out. At times like this, I wish I was hedged, but over the last couple years, it has been up and down in the upper .80's and not been that big a deal. The thing is, if I hedged all my exposure I'm basically picking a cdn/usd rate and pegging myself to it. To me that'd by like a perpetual swing trade that I'd stress over when it was down, and be tempted to cover when it was up. I have come to view currency risk as just an unknowable cost or benefit of doing business in USD.
you can hedge your exposure as to remain neutral on CAD/USD. just like corn producers hedge to lock in a price, if they didnt do that they would be speculating, nothing wrong with that but it doesnt seem wise to speculate if you got no edge on currencies
unless someone is making ridiculous amounts on their trading(like 80% or better) not hedging is a lazy thing to do since it ties so little capital if done through fx or futures. or maybe it doesnt tie anything if done with IB universal account