IDEALPRO: I don't get it!!!

You are a genious!!

 

LMAO ... you made my night! :eek:

Not for nothing, I hope short&naked learns something from this experience ... but I doubt it.

 

Nope, I didn't, because that's not how Ideal/IdealPro works.

 

Although you can use ideal to convert you don't need to.

OK. To be helpful I've done a search and found one of the ib people explaining how to close a trade with your profit in either currency.

Go to

http://www.elitetrader.com/vb/showthread.php?s=&postid=1116812&highlight=idealpro#post1116812


Damn. Thats only half of it. OK. So for:

TWS reads like this.
Underlying > EUR
Exch > IDEALPRO
Description > GBP/EUR Cash EUR.GBP
Forex Pair to Trade EURGBP

1. Taking the standard version.

Your profit will be based in GBP.
In the underlying you have EUR. This means that when you place a trade you are buying or selling Euro.
So if you buy 100,000 at 0.6905, this means you are buying Eur 100,000 and paying GBP.
The amount you are paying is 100,000x0.6905, ie. 69,050 pounds.

Now assume you sell 100,000 Euro at 0.6910. You will receive pounds, calculated as 100,000x0.6910, which is 69,100 pounds.

Thus, your profit is GBP50.


2. Lets say you wanted your result in Euro instead of GBP.

Your original investment was 69050 pounds. It is now worth 69100 pounds.

If you want to end up with euros then instead of selling 100,000 euro you sell 69050 pounds of euros at the new value = 100,000*0.6905/0.6910 = 99,927.64 euro. You will have a remainder in your account of +72.36 euros rather than 50 pounds.


I ignored commissions and slippage (assuming you get the prices quoted) to simplify the calculations.

 

Why bother with IB, they're not the best broker for forex.

 

The IdealPro and Ideal systems work in the same way. They both use a system of currency accounts (budgets) - rather than contracts - with the result that the margin required is different depending if you are long or short your base currency.

Eg. your base currency is in USD, at a balance of $10,000, and want to go long EUR/USD, at a rate of 1.3600.

The desired result will be that your EUR account (which presently has a balance of nil) will increase by 100,000 EUR and your USD account (which presently contains $10,000 USD) will decrease by 136,000 USD. Thus, after the transaction, your EUR account is 100,000 EUR and your USD account is -126,000 USD. This borrowed amount is lent to you at a margin rate of 0.02 (50X) - so requires margin of $2520 USD.

After the EUR/USD rate increases to 1.4000, you 'close' the position. Thus your 100,000 EUR would be exchanged for 140,000 USD, which would moved back to your USD account, taking it to $14,000 USD.


However, instead of going long you went short EUR/USD 100,000 at a rate of 1.3600, your EUR account would be -100,000 and your USD account would be +146,000. The borrowed amount of EUR is lent to you at margin of 0.02 in equivalent USD terms at a rate of 1.3600- so the margin required for this transaction would be $2720 USD.

When you trade currency pairs which don't include your base pair, the currency accounts are still calculated as if each side of the transaction did include the base.

Eg. you went long GBP/JPY 100,000. You GBP account would increase to 100,000, and your USD would decrease by 175,940 (at a GBP/usd rate of 1.7594), but also your JPY account would decrease by 18,170,000 with a complementary increase to your USD account of 175,940.

However the margin for these transactions appear to be caclulated separately, so the GBP/USD transaction requires you to borrow 165,940 USD (which is used in conjunction with the 10,000 USD already in the account) - requiring a margin of $3319 USD. The USD/JPY transaction requires you to borrow the 18,185,158 JPY - which at an exchange rate of 103.36 uses margin of $3519 USD. Thus the total margin required is $6838 USD.

The p/l after closing the trade is of course calculated as before.

 

Thats exactly how it works. Where am I wrong?

 

Actually I made a blunder. What I meant to say is that you didn't add anything in your description that was specific to how IdealPro works. See, I f**** up, happy?

 

I am still confused though.

My account is in USD. I was trading ESTX futures and any profit and loss was booked in Euros.

I wanted to get rid of the Euros and have it in USD. I sold the Euros. Now it says in the Portfolio Window EUR.USD 0 but in the Market Value Window it says -1000 EUR.

Hm. Any explaination?

Thanks.

 

i am also confused with the ib fx system.

for example
i wanted to buy norwegian krona with euro

the nok/eur pair is curentley not trading, only the eur/nok pair.

is there any disantvantage to selling euro aginst the krona instead of buying nok/eur.

thanks for yours answers