I agree but it depends on the strategy: For instance, in case of day trading, nothing is required. At the end of the day one gets his or her USD P&L. In case of investing, buying USD seems correct but one ends up with FX risk. If one wants to cover this risk, then buying USD for 125000 EUR implies buying one EUR.USD futures contract. So, investing in USD the equivalent of 30000 EUR is not enough to cover the FX risk with one EUR.USD futures contract and the USD risk remains.
Yes it's horses for courses. I don't day trade, and I'm not bothered about FX risk. So there is no reason not to do the FX translation, and avoid paying the interest charges. I'd argue that for most people FX risk is just noise, it might add or subtract 2% a year from my account value, which is dwarfed by the vol of the 'real' trading; my actual futures profits are more like -15% to 45%. There's also a nice diversification effect from having your cash spread out amongst diferent currencies. Another argument is that you shouldn't do the FX exchange when the interest rate spread is in your favour, but this is just a very inefficient way of getting exposure to the unpleasantly short gamma FX carry strategy (inefficient because of the spreads applied to the borrowing/lending rates by the broker). GAT
You can change your choice of base currency at any time. It is not a one-time-only choice. The main purpose for the base currency is to determine what currency is being used in the monthly reports which IB will send to you. All interests are calculated on the actual currencies you are using in your account (e.g. cash amounts, margin requirements).
Rob, In case of having a EUR account and USD deposit.This is technically having FX position, being long USD, correct?