I have recently returned to trading US index futures after trading FX for the last few years. I have opened an account with AMP and want to trade ES, NQ, YM etc, so all USD based. It appears as though I can fund the account either in USD or GBP. Obviously GBP is tempting, but how does it work in terms of exchange rates and wanting to trade US indices? Would it be easier to fund in USD (I have a USD account linked to my current account so it is quite easy)?
Doesn't matter - USD or GBP You can exchange any amount of GBP into USD at anytime, and back to GBP. If your account is GBP and you place a ES trade they will convert to USD - if the trade loses money you will see a negative balance in USD. You can eliminate the negative balance by buying USD. EDIT: That's how it is with BMO Investorline - AMP might be different.
Explanation of the AMP currency conversion process and requirements: What is the reason for currency conversions? AMP has 10 different currencies available for funding a trading account: USD, EUR, GBP, CHF, CAD, AUD, HKD, JPY, NZD, SGD. This allows our customers from around the world deposit in their preferred currency. When a customer deposits in any of these currencies, the account’s “Base Currency” will be the funded currency type. Trading P&L is always calculated in the currency of the exchange. For example all US exchange traded contracts P&L settles in USD. If a customer funds the trading account in USD and trades only US markets there'll be no currency conversions required, because the account base currency is USD and all the trading P&L is also USD. If a customer funds the trading account with USD and trades European markets, the account base currency will be USD and the trading P&L will be in EUR. Because the trading P&L is different than the account base currency, on the trade statements - there will be 3 balances displayed on the bottom: 1)USD account balance (base deposit) 2)EUR trading P&L 3)Final USD account balance using an estimated EUR to USD conversion rate An opposite example: If a customer funds the trading account with EUR and trades US markets, the account base currency will be EUR and the trading P&L will be and USD. Because the trading P&L is different than the account base currency, on the statements - there will again be 3 balances displayed on the bottom: 1)EUR account balance (base deposit) 2)USD trading P&L 3)Final USD account balance using an estimated USD to EUR conversion rate These examples will hold true for all 10 available deposit currencies. When does AMP process currency conversions? 1)Once a month, AMP covers all currency debit balances in our customer accounts, usually during the 3rd full week of the month. For example, if your base account balance in USD is 40,000.00 and your P/L balance in EUR is -10,000.00, AMP will convert an equivalent amount of USD to cover the negative EUR trading P/L. AMP does the conversions at prevailing bank rates for the time of the transaction. You will see these entries detailed on the daily statement as “FX Debit Balance Conversion.” If all currency balances are positive, (base account & trading p/l) there is no currency conversion required. 2)When a customer is withdrawing the account balance. If there is any trading P&L, in a different currency than the base account currency, it will need to be converted before the funds are released. For example, customer is withdrawing account balance. The account base currency is USD, but there were EUREX trades – p/l either positive or negative in EUR, the EUR P&L will need to be converted to USD in order to withdraw the full USD balance. AMP has customers from over 100 countries around the world, the ability for us to accept multiple currencies for deposit we have found to be very useful for our customers. As always, our customers are the boss of their accounts and full control of all process. At any time our customers can request a currency conversion to any of the 10 available currencies of their choice. We are fully set up to manage multiple currencies per account - and will process any request to set up our customers account currency preferences. If you have any questions, please do not hesitate to e-mail trading@ampclearing.com Happy Trading! There is a risk of loss in trading futures, forex and options. Futures, forex and options trading are not appropriate for all investors.
Thanks for the replies. What exchange rate do they use? Is it the live exchange rate at that time? Is there much of a spread on the buy and sell price? If I am trading purely US indices, wouldn't it be easier just to fund the account in USD? What are the minimum requirements for each futures contract?
Conversions are done via BMO FX desk & done at BMO live exchange rate. If you are going to trade US Indices and prefer to avoid the conversion rate risk, you would fund in USD. Either way, is ok with us. Here is the Full List of Day Trade Margins: http://www.ampfutures.com/trading-info/margins/ There is a risk of loss in trading futures, forex and options. Futures, forex and options trading are not appropriate for all investors.
Sounds like you are paying a currency spread between GBP and USD once a month to even the account. That seems to be unnecessary unless there is a really good reason to be staying in pounds (safety?) You should say why you want to fund in pounds then we can weigh the benefits/drawbacks.
That is only necessary if a losing trade(s) has caused a negative USD balance. The currency spread would be negligible compared to the loss of the trade. Example Account in 10,000 GBP A $5000 USD trade goes to zero. New account balance 10,000 GBP, and negative $5000 USD. To even the account $5000 USD/GBP must be bought.