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TOTO7469

How to deal with a EUR/CAD account ?

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Hi,

 

My IB account is in EUR because I live in France and I though it would be less risky than having a USD account (because of the EUR/USD fluctuations).

 

Unfortunately, DAS TRADER doesn't manage foreign currency and I think I am oblige to have a USD account.

 

I know I am not the only non US citizen trading on the US market (Andrew for example who is canadian).

Could you tell me how you deal with this ?

 

Thanks.

 

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Hi Toto

 

I'm trading from the UK. To trade the US market I have my US account in USD. It's unfortunate that by converting currencies you are in effect taking a single (currency) trade on your entire US trading account, but I don't really see that it is avoidable.

 

There's a lot of risk in this game. In my opinion, the single biggest risk is that you open a brokerage account with a firm run by a crook/pillar of the establishment like John Corzine. Currencies move but generally they don't go to zero, so in the scheme of things, the currency risk is significant, but not total. You never know, it's about 50/50 whether you make or lose on the currency exchange rate in the long term, so it could work in your favour.

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I opened an account with IB Canada (separate entity), and here is what I have been doing to trade US stocks:

 

1. Funded account in Canadian dollars (CAD)

2. Set base currency to USD in Account Management (only for display and reporting purposes)

3. Converted a small amount of CAD to USD to cover initial losses. This video tutorial was very helpful

4. Each day, my Buying Power in IB/DAS is converted from CAD to equivalent USD

5. I day trade only US stocks and close out all positions at end of day

6. I stay well below my BP--again, calculated in USD in DAS

7. Profits and losses are settled in USD automatically

8. Commissions are deducted from USD balance

9. USD balance increases/declines with profit/loss at the end of each day

 

Note that the majority of my equity used for buying power and margin is still in CAD (+90%). When I am profitable, I plan on converting the USD gains to CAD on a monthly--maybe even weekly--basis. This way I am not exposed to long-term currency risk.

 

Not sure if any of the above is helpful at all, but I've documented it here for future reference. Best of luck!

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Thanks Peter and Robert for your answers.

 

So, I changed the set base currency to USD in account management in IB and now, my buying power in Das is correct.

I didn't think it would be so easy :-)

 

Robert, I can't see the step 3 video (I have a picture but can't read the video).

I don't understand what are the initial losses you speak about.

Could you tell me more about this ?

 

Thanks a lot.

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The video player issue is probably flash/plugin related. It works for me on both mobile and desktop browsers.

 

What I mean by initial losses is that you need some USD as a cushion. Since trades on US stocks are automatically settled in USD at the end of day, you may end up in a situation where you have a negative USD balance due to losses and commissions.

 

I believe that you will be charged interest on this negative balance. To remedy the negative balance, you will need to convert some EUR to USD. So rather than deal with that ad-hoc, I just converted a small portion to USD ahead of time. And thankfully I did--I've been in the red consistently since going live!

 

Hope that makes sense.

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Hey Robert, 

Did you have to maintain a minimum of 10K CAD in your IB account or did you deposit a lower amount? I am just opening an IB account now in Canada and I wasn't sure if they had a minimum deposit that they required or not. 

Patrick 

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The minimum deposit was $10k USD when I opened my account in February, 2018. Another member mentioned that it has been lowered to $5K USD. Please contact IB Support to be sure!

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Hi Robert,

Don't you pay everyday loan fees tarding in USD using CAD?  🤔

I understood that when tarding in a non base currency, IB open a loan in the equity currency  and close it with the closing trade.

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13 hours ago, tardi44 said:

Hi Robert,

Don't you pay everyday loan fees tarding in USD using CAD?  🤔

I understood that when tarding in a non base currency, IB open a loan in the equity currency  and close it with the closing trade.

There is no loan or interest paid for intraday positions. However, if you end the day with negative USD and don't exchange funds to zero this balance owing, then there is interest. This is why I ensure I always have some USD per step (3) above.

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Thanks Robert for the information. Very helpful.

My 2 cents, 

For step 3, if you are using the Web platform for IB, then you can do the following.

1. Go to Orders & Trades

2. Enter a Symbol - Enter the Currency which you need to convert (in my case EUR -> USD, so I had to enter EUR.USD).

3. Click Sell order 

4. Quantity - how much money you want to convert (for e.g 1000 EUR)

5. Order type -> Limit, Time-in-Force -> DAY

6. Submit Sell order.

You get filled, when the price hits.  You can go to Portfolio to check for confirmation. 

 

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I live in France, so I will use the same strategy as Robert described.

With PDT rule we have to deposit minimum 25.000$ but if I have (for example) 20.000 EUROS + 5.000 USD in my IB account, is it good for the PDT rule ? 

20.000 EUROS + 5.000 USD is more than 25.000USD but I don't know if we can mix EUR and USD for the PDT rule.

Does someone know this ? 👍

 

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yes it is ok to keep euros on your account but they will count it with the current USD/EUR rate like if you had USDs. if USD goes up against EURo then you could be below PDT depending on your current level. you can check your account size and buying power in your account properties in TWS or on the broker website. IF it is over 25k then you can trade more than 3 trades in 7 days. If below, only 3.

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