Roth IRA and non base currency products

Discussion in 'Retail Brokers' started by dtmike, Apr 14, 2010.

  1. dtmike

    dtmike

    I have a Roth IRA account with IB and my base currency is Usd. I would like to trade the FDAX intraday. My understanding is that with this account type I would have to execute a currency trade on IDEAL because you can not borrow currencies with a Roth IRA. So my question is: If I purchase enough Eur.Usd to cover my trading on FDAX, should I just hold the Eur.Usd position or close it out on a daily basis? And if I should hold the Eur.Usd position should I hold it for the week or just hold it as long as I continue to trade the FDAX?
     
  2. If you're going to be fairly active with your trading, I would just leave the EUR in your account. IB isn't paying any interest on the USD so no reason to incur a daily commission. There's currency risk of holding EUR but that can work both ways.
     
  3. dtmike

    dtmike

    Thanks, Hurricane. Would selling an equal amount of USD.EUR be a good hedge and then just leaving both positions open as long as I keep trading the FDAX?
     
  4. dtmike

    dtmike

    Correction to my last post:

    Would BUYING an equal amount of USD.EUR be a good hedge?
     
  5. You can't have a negative currency balance with a Roth IRA. Buying USD.EUR is the opposite of buying EUR.USD. These are actual currency moves and would cancel each other out, not leaving you with any Euros for your other purchases. Plus the spread on USD.EUR will be wide because it's not a standard currency pair.

    If you've got enough Euros that you want to hedge, there's an ETF that you could buy from your USD account but I'm not sure of the ticker for it.
     
  6. dtmike

    dtmike

    Thanks Hurricane! I appreciate the help.