USD as risk

I don’t want to post off topic on Craig’s forum, so I’ll continue here.

I said that having an account in USD instead of EUR is a risk too. I said this because I live in Europe, so eventually I will need euro’s to pay for my beer, rent etc. I don’t know much about forex, but it seems to me that the valuta risk is larger in this case than when you live in the USA and have an account in USD. If the USD loses 50% to EUR then I lose 50% of my beer while US citizens can still buy the same amount of American beer (which isn’t worth very much, but that’s another matter).

I haven’t read the other thread, so I’m not sure if this comment is on topic. But in your case you can easily hedge your position in your USD account if you want to exclude currency risk. The easiest way to do this is through an Oanda account, which allows forex positions in smaller increments than the typical ~$10,000 minilots, which means you can always keep a (nearly) perfect hedge.

But then I will have to pay interest because it is basically a loan in USD to buy EUR. And if it goes too much in the opposite direction, I will get a margin call and the position will be closed. I would prefer to see every time I close a trade that all my free USD are converted to EUR. But then I’ll have to pay commissions.

I suppose I should buy an European beer future :wink:

but you receive interest on EUR as well, so you only pay the interest differential, less than 1% per year currently.

taking into account the bid-ask it’s actually a little more than 1%

> American beer (which isn’t worth very much, but that’s another matter).

The big brands suck, but we’ve seen some improvements out here in the west:

I didn’t know that.

I didn’t know that either :slight_smile:

it actually is an important concept in forex. In certain cases you can actually earn money from this. For example, interest on the yen is very low. So if you buy dollars and sell yens, you make ~4% annually just from interest. With 10x leverage it’s 40%, with 200x leverage, well… you get the point.

this is what people refer to when talking about the “yen carry trade”. some think it will unwind eventually at which point global financial turmoil may occur.

Hi Jules,

Isnt a beer future the same as a barley field?

Seems strange in uk when we are spoilt for choice with ales, porters, stouts, chimays from belgium, weissbeers from germany, krieks and so many other great beers, that when I go up town people just seem to be drinking bud - and not the authentic czech buddva at that.

btw, with a uk address you would be able to trade spreadbets which are basically futures wrapped up as bets but without the exchange risk and with no tax on profits. It might even be legal in some european countries now - worth looking.

I must look that up, but the Dutch governement is allergic to anything with the word “bet” in it, so I expect that it isn’t legal here.

BTW, it is my understanding that the Dutch taxes assume that a non-professional investor will have 4% profit annually, regardless of his real profit or loss. He will have to pay 30% taxes over this 4%, which is 1.2% of his capital.

Jules, don’t know if they have the same in Europe, but here in the states they have some shops that sell for example gold and silver coins. If you buy over $ 1,000, you pay no tax.

I would also suggest that to hedge you buy actual currency from China. In the States, we can put the coins and money in a bank safety deposit box.

??? If I buy coins, I can’t use the money for trading and I will still have to pay 1.2% taxes.