Just curious what the double commissions I have read about regarding IdealPro refer to? After closing a trade in one of the majors is there really a second commission to convert your currency back to USD if you would subsequently like to trade stocks, futures or options with the money? Thanks
ya iv found when i want to convert my profits back into my base currency I have to pay commissions again. But then again since its unlevered (unlike the trades) its a really tiny amount.
Best way to avoid having to convert with IDEAL is to adjust your exit position size. For example, if you have P/L in a USDJPY trade, to go absolutely flat your US dollar notional on exit will differ from that of entry. So adjust your last piece of your position on exit to reflect the exact amount of US dollar notional at the current exit USDJPY exchange rate. Same for EURJPY, etc. Pain? yes, but it can be done with manual calculations and I am confident that some sort of API code could be written to take care of it - interfacing with TWS.
I'm sorry, but I am new to currency trading. Could you please give a specific example of how this would be done? Thanks
This is something that you must do yourself - know the P/L - Risk/Reward calculations for direct and indirect currency pairs. For example, when you buy JPY vs USD, you are long JPY and short USD at a certain USDJPY exchange rate. If you want to exit that postion at a different exchange rate, you must adjust the amount of USD you buy back at the new exchange rate to equal the exact amount of notional JPY that you need to sell to go flat. This is most easily calculated in a spreadsheet. These adjustments for USD based accounts must be done for indirect currency pairs (USDJPY, USDCHF, etc.) also must be done for EURJPY. IB currently utilizes the same account that is done in the interbank market. Many market makers do not do this. What this does allow is trading around various currency pairs without having to close out of your initial position, an advantage...
I have done the same thing, but and even trickier question is this: You buy a foreign stock with that stock's native currency you have held in the account for several months previous. You then sell that stock, sit for a while flat (Still holding the currency) Invest in another foreign, sell it and then reconvert your currency to Greenbacks two months after that. This mixes currency and equity trades. A pure currency or pure equity position is simple enough, but how the heck do you split this out and report them for taxes? If you report the US price for the buy/sell on the stock, you are picking up the currency gain/loss as well. Doing the currency buy/sell tax calculation then has you paying tax on it twice. Ugly! Obviously I would like to get the 60/40 preferential treatment for currency trading....but I don't think Sched D has any provision for entering foreign stock gains in their native currency. (Maybe average the buy/sell exchange rates to get the currency gain/loss out of the equity and then do a straight currency gain/loss calc?) Logically that would work fairly, but the tax law isn't about logic and fairness. I wonder what the IRS approved procedure is? Thanks... T