This is a discussion on How to hedge currency risk with Interactive Brokers? How to hedge currency risk with Interactive Brokers? Community Links Members List. May 20, , Hi guys, I've got a GBP account with interactive brokers via a Limited company and I've been making some trades in the US markets for the last 3 months or so but in most of the trades I've ended up giving back part of the profit when closing the trade and converting back from USD to GBP. I've read some comments on the forum about this subject but I didn't manage to see how is this currency risk actually hedged with Interactive Brokers?
May 23, , 1: Hiya, Do you guys think this question would be better asked in a different section of the forum? I'd like to see a practical example of how it's done to try with my Interactive Broker demo account first and after with the real one At the moment I've tried using the FX hedge options that one has when entering a trade in a different currency FX conversion and FX Ideal Pro but, it seems that in both cases you are still exposed to the currency risk anyway.
Any idea what I should try? May 24, , 5: You have no real currency risk, because IB lend you the currency in which you buy. And off course you still have the GBP you had to start with.
USD goes to 1. When you sell the stocks at that price, you receive back USD k is cash, which cancels out the loan. Except for stock price moves If you make a profit on your stocks, let's say you sell for USD k Then you wil lend up with a positive USD cash balance of 10k May 24, , Originally Posted by JackRab. May 25, , 2: If you want no currency position, then don't do anything when you buy foreign stocks But then you do need to pay the interest rate on the loan 1.
USD on spot market. Now you do have a USD currency position k long. The hedge through the future gives you a better, more market conform, interest rate. But, you will need to rollover the future on expiry This way is more difficult. I wouldn't do it if you intend to keep the stocks not too long If you're not too advanced in your trading, don't make it too difficult. The following members like this post: May 25, , Futures continuous vs rollover vs forex trades when hedging?
May 26, , 6: Originally Posted by mickael T] Q1- Do you know which instruments are better for the purpose of hedging the currency risk? Checking their requirements, the GBP.
Q2- Regarding the futures, if there's an instrument for a continuous future, wouldn't that be better than getting the 3 months one and having to roll it over every 3m? Q3- And if the rollover option is better for a reason, does that rollover happen automatically if you keep the position opened? Also, you can get really creative by trading currency options or options on currency futures!!!
Thread Tools Show Printable Version. Search this Thread Advanced Search. Page 1 of 3. Originally Posted by JackRab So Originally Posted by mickael28 T] Q1- Do you know which instruments are better for the purpose of hedging the currency risk? Feb 5, 7: Using Fx to hedge currency risk. Dec 17, 1: Aug 26, 2: Apr 7, 8: Jan 24,More...