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Systems (EA's and manual), and Managed Accounts => Manual Systems, Trade Journals, Indicators, Manual Trade Help => Topic started by: peeper on September 21, 2012, 08:19:43 AM

Title: Is USD safer than EUR to base your account in?
Post by: peeper on September 21, 2012, 08:19:43 AM
Hi,

I am told that it is generally safer to trade with the same base currency than that of the bank account you send money from. However, everybody also speaks about the potential crash of the Euro. Is there an risk to fund trading accounts with Euros?
Wouldn't it be safer to buy USD's and trade with dollars as base currency?

I expect the USD to be more stable than EUR in the long term. Maybe I am wrong. But if I am right, isn't it crazy to trade Euros?
Title: Re: Is USD safer than EUR to base your account in?
Post by: pallruf88 on September 21, 2012, 08:21:29 AM
IMO i feel USD would be safer as it is a universal currency and most banks would not have any trouble taking the currency.
Title: Re: Is USD safer than EUR to base your account in?
Post by: peeper on September 21, 2012, 08:26:49 AM
The underlying question would of course be:

If I trade in USD instead of EUR, am I at risk of loosing money (which would be the case if the EUR kept going up), or do we all agree that the opposite is true?
Title: Re: Is USD safer than EUR to base your account in?
Post by: pallruf88 on September 21, 2012, 08:31:05 AM
It really depends cause now with the Euro at risk it would just be safer to go with a currency that you are most comfortable with.
Title: Re: Is USD safer than EUR to base your account in?
Post by: jaggermikester on September 21, 2012, 08:38:41 AM
Personally I wouldnt have either currency as my base currency, I would only feel safe with AUD or the swissy. Theres some pretty crazy currency wars going on right now and with the fed announcing unlimited qe3 and the euro zone in tatters, I would put your money in safer hands than those running those nations.
Title: Re: Is USD safer than EUR to base your account in?
Post by: user456 on September 21, 2012, 08:39:42 AM
The underlying question would of course be:

If I trade in USD instead of EUR, am I at risk of loosing money (which would be the case if the EUR kept going up), or do we all agree that the opposite is true?

you are trading currencies right? Just open a hedge trade to compensate the risk.
Title: Re: Is USD safer than EUR to base your account in?
Post by: peeper on September 21, 2012, 09:21:14 AM
Wow.. you guys are quick to answer.

I have to go for few hours and i'll come back to conversation.

But for now I'd say:

With a hedge you mean: whenever you add or withdraw money from account, you buy for as much in the opposite currency?
Title: Re: Is USD safer than EUR to base your account in?
Post by: donnaforex on September 21, 2012, 09:45:20 AM
if your home currency is for example AUD, and you are opening an account in USD then your account is one big AUDUSD transaction, you can make a trade in the opposite direction on AUDUSD to hedge if you wished to do so. Similar for any other currency you can think of.
Title: Re: Is USD safer than EUR to base your account in?
Post by: peeper on September 21, 2012, 12:09:01 PM
Actually my last comment didn't make any sense.

My question would rather be, what size should that trade be?
What about when the account evolves with new investments/withdrawals?

If anyone feels like, I'd be happy to know the details of how to calculate this.


And the general topic could evolve to ask:
As a European, using European bank accounts, is it safer to base my trading in USD and hedge it with EUR, or the other way around (which is normally advised, I think)?
What would potentially bring most loss?


@jaggermikester:
Is it what you're doing, are you actually trading with AUD or CHF as base currency?
Title: Re: Is USD safer than EUR to base your account in?
Post by: JJ-FX on September 21, 2012, 01:32:27 PM
Assuming EURUSD trades at 1.30 and you fund your account with 13k USD then your bank or credit card company will charge 10k EUR. So basically you sell 10k EUR against USD. If you want to hedge that position you can buy 0.1 lots EURUSD and keep this position open. If you decide to close the account and EURUSD trades at, let's say 1.40, you close the position making a profit of 1k pips @ 1 USD = 1k USD and you have a new balance of 14k USD. If you withdraw this amount your bank will credit your bank account with 10k EUR.

In theory you would have to adjust your hedge after every trade you make on this account, but given the minimum lot size of 0.01 you can only adjust in 1k EUR increments anyway.

I have my trading accounts in EUR, USD and AUD without hedge - the idea is to make enough profits to compensate any potential loss. Hedging the risk is probably the more professional approach though.
Title: Re: Is USD safer than EUR to base your account in?
Post by: peeper on September 26, 2012, 05:25:16 PM
Thank you JJ-FX, I think I'll follow your model and trade the same amount in EUR and in USD for now. I mostly live in the US and in Europe and need both currencies anyway.

I think that a hedge trade would mostly bother me, reducing margin and having an equity constantly away from balance for the monitoring of my accounts.

I might change my mind if I ever trade much larger amounts.



Assuming EURUSD trades at 1.30 and you fund your account with 13k USD then your bank or credit card company will charge 10k EUR. So basically you sell 10k EUR against USD. If you want to hedge that position you can buy 0.1 lots EURUSD and keep this position open. If you decide to close the account and EURUSD trades at, let's say 1.40, you close the position making a profit of 1k pips @ 1 USD = 1k USD and you have a new balance of 14k USD. If you withdraw this amount your bank will credit your bank account with 10k EUR.

In theory you would have to adjust your hedge after every trade you make on this account, but given the minimum lot size of 0.01 you can only adjust in 1k EUR increments anyway.

I have my trading accounts in EUR, USD and AUD without hedge - the idea is to make enough profits to compensate any potential loss. Hedging the risk is probably the more professional approach though.
Title: Re: Is USD safer than EUR to base your account in?
Post by: ECNtrader on October 03, 2012, 11:50:41 AM
for now i think dollar is more safe.
but i prefer CHF
Title: Re: Is USD safer than EUR to base your account in?
Post by: salsoolo on October 10, 2012, 02:34:03 AM
whatever fills your boat!
Title: Re: Is USD safer than EUR to base your account in?
Post by: 999cjb on November 17, 2012, 08:02:48 AM
I know I'm a bit late getting in here but I would always run my Forex accounts in USD although it's not my home base currency.

This is because if you are using USD you have a far greater choice of payment processors and it is less painful to change brokers and move funds from broker to broker.

I know I take a hit on final withdrawal to GBP but what are we if not currency traders? We should know the right time to withdraw if the money is not needed urgently.
Title: Re: Is USD safer than EUR to base your account in?
Post by: Darkmatter on November 30, 2012, 04:33:17 AM
I will not touch EUR or USD.

It is easy for me to say this as I am from Singapore and I funded my account in SGD. It is one of the strongest and most stable currencies.

Even if you are in Europe, if your broker allows it, you should choose other currencies like SGD or CHF to fund your account. Just take it as a form of diversifying your currency portfolio as well, in case EUR and USD goes down the pipe.
Title: Re: Is USD safer than EUR to base your account in?
Post by: tradingteacher on December 20, 2012, 02:08:27 AM
With the way the Fed debase the USD (and they are expected to debase it by $trillion in 2013) I would not think anything USD based is the smart money.

The is good so long as they keep away from the euro.

The USD is on thin ice.

Let's say China decide to dump the many bonds they hold for US on the market ... $ becomes paper in a second.
Title: Re: Is USD safer than EUR to base your account in?
Post by: Wajeeh93 on August 10, 2013, 06:55:26 PM
In my humble opinion, the United States dollar would be a better currency to base your account since it is the currency of the current super power of the world. Its more like an international currency which is easily accepted and appreciated all around the globe. You can say its more of a prestigious currency and so basing your account in this currency would be better.
Title: Re: Is USD safer than EUR to base your account in?
Post by: cyberryder on August 10, 2013, 08:30:21 PM
it doesn't matter what you choose. If either USD or EUR crashes one day, you won't be safe in the other one. Both are too big to fail and highly correlated. This is also true for most of the other ones then.

Title: Re: Is USD safer than EUR to base your account in?
Post by: forexfish on August 10, 2013, 08:44:58 PM
it doesn't matter what you choose. If either USD or EUR crashes one day, you won't be safe in the other one. Both are too big to fail and highly correlated. This is also true for most of the other ones then.

Both have same degree of risk in short term, however in bad times often noted USD get stronger than its counterparts (imo).
Title: Re: Is USD safer than EUR to base your account in?
Post by: cyberryder on August 10, 2013, 08:50:07 PM
well as long as we believe in and have the system of turbo capitalism, infinite and exponential growth (and also depts), USA can be maybe seen as a save haven, as they believe in, preach, and live this crap system (i'm really not a fan) like nobody else in this world and as of today they manipulate the whole world and other currencies, even go to war, to defend their edge.
Title: Re: Is USD safer than EUR to base your account in?
Post by: bismillahwd on August 10, 2013, 08:58:59 PM
it doesn't matter what you choose. If either USD or EUR crashes one day, you won't be safe in the other one. Both are too big to fail and highly correlated. This is also true for most of the other ones then.

Both have same degree of risk in short term, however in bad times often noted USD get stronger than its counterparts (imo).

I do realized this, many repated since i remember asian crisis 1998, subprime 2008, eurozone 2011.
Stocks, gold, gbp, euro. Mostly Everything tumbling down in those financial crisis, but usd became king,

Its there a day usd would go south, but imho its not near here now.




Sent from my iPad using Tapatalk HD
Sorry for any typo
Title: Re: Is USD safer than EUR to base your account in?
Post by: forexfish on August 10, 2013, 08:59:30 PM
well as long as we believe in and have the system of turbo capitalism, infinite and exponential growth (and also depts), USA can be maybe seen as a save haven, as they believe in, preach, and live this crap system (i'm really not a fan) like nobody else in this world and as of today they manipulate the whole world and other currencies, even go to war, to defend their edge.

I agree and am not fan either as they have messed the whole world but these are hard facts and unfortunately we have to accept.
Title: Re: Is USD safer than EUR to base your account in?
Post by: Surrealistik on August 10, 2013, 09:09:30 PM
I do realized this, many repated since i remember asian crisis 1998, subprime 2008, eurozone 2011.
Stocks, gold, gbp, euro. Mostly Everything tumbling down in those financial crisis, but usd became king,

Its there a day usd would go south, but imho its not near here now.

This. The demise of the USD is greatly exaggerated, as is the Euro in my view. The naysayers will be disappointed (and poorer if they bet accordingly) in the near to medium term at the very least, I assure you.

Of the USD and EUR, I'd personally go with the former, if only because it is the world's reserve currency, the biggest stock markets/commodity exchanges in the world are denominated in it, it is the most universally accepted currency, the most resilient in the face of crisis, its issuer is in arguably better condition than the EU and cannot be permitted to fail, and as a Canadian I am more likely to extract use from it.
Title: Re: Is USD safer than EUR to base your account in?
Post by: Candlestick on August 11, 2013, 09:37:02 AM
Here is my way to deal with currency risks on my bank and investment accounts.
I have approximately 50:50 EUR:USD amount on my accounts on total.
About once per year or so, i transfer my free money up to 30/70 or 70/30 to the currency i belive to be cheap and go up. Doing this makes me little profit and helps to elliminate inflation affect on cash on bank.
Title: Re: Is USD safer than EUR to base your account in?
Post by: Johan Ryden on August 27, 2013, 03:12:17 PM
EU and US have the biggest economies in the world behind them. I wouldn't worry about using either of them...
Title: Re: Is USD safer than EUR to base your account in?
Post by: SubZeroFX on September 09, 2013, 02:30:21 AM
I think the best way to trade forex is account with your home base currency... but if you can't go USD account.
Title: Re: Is USD safer than EUR to base your account in?
Post by: jhehe on November 02, 2013, 12:47:37 PM
What about making one long term speculation? For example, instead of your usual intraday analysis, you look at the weekly or even monthly outcome and basically deposit the currency in your favor comparing the current rate to the potential future cash out rate. Then while you are speculating in the process, your base account currency will be appreciating in value. If course, this is assuming that the king ten price movement is in your favor. I guess otherwise you will still be screwed.
Title: Re: Is USD safer than EUR to base your account in?
Post by: jeuro on November 05, 2013, 09:25:30 PM
.
It makes no sense to me to have an account in a different currency of my own.

It is less risk. Because will always be accepted in my  own country
regardless of exchange rates...

if you are in the Euro zone.. and have 1000 Euros in deposit..with a buying power of 2000 liters of milk .
 and tomorrow the eur/usd drop 1000 pips... if you withdraw the 1000 euros, . still buys 2000 liters of milk.

So, basically, the only thing that affect your own currency deposit is inflation...
but that is why we trade forex .. dont we? to beat inflation by making extra money... and/or investing in a different currency we think will appreciate more then ours.  So..no need to make a paper exchange to start with (which is very expensive ).

Using our own currency as deposit  to exchange in the market on credit is just fine.

J.
Title: Re: Is USD safer than EUR to base your account in?
Post by: foodietr on June 05, 2014, 03:18:36 PM
I would suggest using USD if you are looking for a more universal trade. It is accepted is many countries as the norm. EUR is quite stable too, but mostly limited to the Eurpoean Union and is not a valid currency in a lot of countries. I would suggest if you want to avoid foreign exchange rates to weigh down on you, then go for your national currency. They also levy charges in the form of service tax if you are opting for foreign exchange conversion.
Title: Re: Is USD safer than EUR to base your account in?
Post by: Kristofer on June 24, 2015, 08:54:43 PM
I prefer to have EUR or USD trading accounts. I think it's more reliable. Although I guess, USD is more reliable then EUR.
Title: Re: Is USD safer than EUR to base your account in?
Post by: JohnB on June 26, 2015, 11:02:50 AM
I think it depends where you live. If you live in an EUR country then choosing EUR might make more sense. There's also the Greece issue now but highly unlikely anything major will happen. Like others said, both currencies are "too big to fail", so it's really up to what local advantage the currency can give you. i.e. if you live in EU then EUR might make more sense. Anything outside EU pretty much uses USD as default.
Title: Re: Is USD safer than EUR to base your account in?
Post by: hybrid on December 07, 2015, 06:44:40 AM
I think security of account is related to our broker , if Broker is regulated then invest inn USD or EUR you will feel secure. I invest in USD and with draw in same currency too. I never feel any problem if I use EUR because I has trust in my broker. USD easy for me to exchange in my account of local currency.
Title: Re: Is USD safer than EUR to base your account in?
Post by: Earleone on December 07, 2015, 10:25:17 AM
I think that it is smart to treat the base currency as a long term trade. It has been very profitable for me the last 1 1/2 year to hold the base currency in USD even if I live in europe since euro has weakened and USD showed strength. It made a difference for appr 25 to 30 % for that period.  It is like having an unleveraged trade for your local currency against the base currency.
Title: Re: Is USD safer than EUR to base your account in?
Post by: Guilber on December 11, 2015, 11:43:04 AM
Quote from: jeuro link=msg=292031 date=1383686730

.
It makes no sense to me to have an account in a different currency of my own.

It is less risk. Because will always be accepted in my  own country
regardless of exchange rates...

if you are in the Euro zone.. and have 1000 Euros in deposit..with a buying power of 2000 liters of milk .
and tomorrow the eur/usd drop 1000 pips... if you withdraw the 1000 euros, . still buys 2000 liters of milk.

So, basically, the only thing that affect your own currency deposit is inflation...
but that is why we trade forex .. dont we? to beat inflation by making extra money... and/or investing in a different currency we think will appreciate more then ours.  So..no need to make a paper exchange to start with (which is very expensive ).

Using our own currency as deposit  to exchange in the market on credit is just fine.

J.

This is very good point. I also keep my account in EUR.
Title: Re: Is USD safer than EUR to base your account in?
Post by: hybrid on April 07, 2016, 03:43:56 PM
I use USD in my capital all my trading accounts are based on USD. I think it is better than any other currency . If one is convenient in EUR he can use this currency also . I feel USD is better for me to exchange in my local currency safety of funds not depends on currency it is on broker how fair they are with you.