|
PureBytes Links
Trading Reference Links
|
Depends on your broker. But usually your fx risk is only on your margin
committment +/- profits/losses.
If you are prosition trading then trading overseas markets can give you
excellant diversification- Its worth considering even in the face of some
fx risk.
Looking at my pnl this morning, my US based positions have been crunched,
but my overseas positions have (almost!) made up for the loss.
E.
Jeffrey B. Stewart wrote:
> Hi RTs,
>
> Anyone position trade non-US futures market on foreign exchanges? If
> so, do you hedge the underlying currency risk?
>
> Here is my question:
>
> If I am long one German bund (DM 250,000) and the interest rate does not
> change but the D-Mark price moves from 5700 to 5600, wouldn't it be true
> that the value of my position would have gone down by US $2,500?
>
> That clearly would be the case if I were long two contracts of D-Mark
> (DM 125,000) and the price moved from 5700 to 5600; I would lose US
> $2,500.
>
> If the above analysis is true, then it seems that when trading the
> German bund or other non-US markets the fluctuation in the underlying
> currency can be a major factor in the profit or loss of the trade, a
> factor not covered by the technical analysis model used to trade the
> foreign market.
>
> Is my analysis correct or have I failed to consider something? If my
> analysis is correct, it would seem that position trading non-US markets
> by a US trader should be accompanied by hedgeing the risk of change in
> the value of the underlying currency against the US dollar.
>
> Thanks,
>
> Jeff
|