I'm a Canadian trader but my account is in all USD. I would like to greatly reduce/eliminate my currency risk to USD. Right now if the USD goes down or CAD goes up faster I'm going to get killed. I would like to be able to hedge this risk, but other than buying UDN I can't think of anything that would be effective (since I cannot and don't want to trade forex). Does anyone have any ideas? I don't care as much about lost profits if the USD outperforms CAD. I'm just more concerned with hedging the risk so that I get my returns irrespective of currency. Is someone does have a suggestion, can you please word in a way that is for every $5,000 or $10,000 in USD risk, you can hedge with ______ to offset the risk.
Other than Currency options, there is FXC which is an ETF based on Canadian currency, which I am long in futures and currency. I have accounts when my system says to short USD, I find currencies that are near 9 year lows and exchange USD into 3 other currencies, some have no exchanges I can trade and other do so I can continue to trade their instruments without constant exchanging rate monies as that account is totally a different currency than the USD, so I can profit like you are doing but unlike you, I would not trade instruments in a currency I expect to be too high, but we all have our methods and I am often off by a couple years, but overall I have done well on currency making increase on USD and trading of their instruments.
You can buy M6C futures or forex mini-lots in a sub-account. Make room for the potential margin adjustments.
I've been wanting to stay away from futures and forex because my understanding is that if things go against you, you can actually owe more than you started with.
I'm not fully following you. Is there not an etf i can use that will allow me to continue to trade US securities but remove the currency risk?
A wise and prudent choice. However, significant leverage is what makes it work. To hedge 100% on a cash basis would incapacitate your trading capital 100%. This leaves you to choose between the associated costs of long only options trades or free-balling.
So lets say i have a 10k USD account invested in ITM long term options. . How do i figure out what my currency risk is? The specific trade can i make to offset it?