I’ve recently subscribed to a Forex strategy for the first time with my Interactive Brokers account, using AutoTrade. Newbie, for sure. I’ve noticed that after FX pair trades close I’m left with foreign cash balances that I’m tempted to convert back to my USD base currency.
The C2 strategy P/L seems to assume full repatriation immediately on close and does not appear to reflect the impact of residual foreign cash holdings and my delayed manual repatriation conversion losses or gains. This foreign cash also “seems” to have a negative affect on available cash and margin for new trades (not sure exactly).
I don’t see any settings for auto-conversion on position close in IB – their documentation seems to indicate that they do not.
Is it normal to need to manually cleanup and convert cash periodically (regularly) after FX pair trades? I feel like I’m doing something wrong. Can anyone explain what’s happening?
Hi I had the same issue - just drop then a message ( via the platform messaging center) and they’ll provide a detailed run through response - to convert you have to go through their web trading platform which is very straightforward - download links on your IB log in. Overall these conversions are tiny in $ terms but can add up over time…
I’m already familiar with the manual conversion process. Are you suggesting there is an auto-conversion repatriation process? You said you “had” this problem, indicating it is not a problem anymore for you.
manual but it converts all at once via their trading platform
…IB will explain more fully…
As you’ve experienced, Interactive Brokers does keep FX pairs in the source currency. The conversion is only manual and is initiated on the IB TWS platform. Of note, Interactive Brokers discontinued Forex margin trading for U.S. retail traders in August so this, combined with the unfamiliar settlement (or lack thereof), had many subscribers choose to follow FX strategies at other brokers like Gain or FXCM.
Here’s what happens in a detailed example of the interaction between C2 and IB. There’s some feature recommendations for C2 at the end.
- Pre-existing condition: base currency is USD and no foreign cash exists in IB account
- AutoTrade STO (short) 6 FX pair EUR/JPY
- IB converts USD to 60K EUR and -7.2M JPY cash to apparently back the trade (I now have foreign cash and an open trade)
- AutoTrade BTC the 6 FX pair EUR/JPY
- C2 registers P/L for trade in USD, assuming USD repatriation (which does not actually happen in the IB account)
- IB still shows 60K EUR and -7.2M JPY cash
- Sometime later, after EUR and JPY continue to float against USD base, I manually convert cash balances back to USD in the IB account (since they are both interest bearing and not something I want to carry)
- Due to the manual conversion, C2 registers 2 open “manual” trades in P/L one for conversion USD.JPY and one for EUR.USD at the later exchange rate, and also stops auto-sync
- C2 now thinks I have open trades, but I do not, so I have to “delete” them from my P/L and losses/gains from conversion are never accounted OR forever hold them in the C2 P/L and watch them float around as bogus open positions
- The strategy never reflects any of this in its performance
Recommendations for C2:
- As a user selected option, AutoTrade repatriates residual foreign cash on close of position
- C2 P/L shows impact of related floating foreign cash balances in performance
Rod, I saw mentions of this notice from other posts, but was unclear on the impact. Thanks for the explanation. I see the vast majority of subscribers still using IB in Forex strategies and I saw that C2 recommended FXCM as their top broker (for these Forex strategies), probably for these reasons. I guess from C2’s perspective, it still sorta works but has some glaring problems for users and lots of lost revenue if they simply stop supporting IB for Forex. I would suggest that if C2 continues to support IB for Forex, that some of these issues might be handled a bit better in how it’s reported or addressed in AutoTrade.
I switched to FXCM for my Forex strategies. After a few weeks of watching it, FXCM seems to be a superior experience to IB for Forex AutoTrading. All of these unsavory Interactive Broker related experiences with foreign cash from FX trades are gone – FXCM uses margin for foreign cash and automatically repatriate it so there’s no holding of foreign cash that you would need to handle separately. IMHO, it’s worth the switch.
UPDATE 2/8/2017 - FXCM sold me out. U.S. customers have to use something else. Looks like C2 is recommending Gain Capital.