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Author Topic: Is USD safer than EUR to base your account in?  (Read 9181 times)

Offline peeper

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Is USD safer than EUR to base your account in?
« 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?

Offline pallruf88

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Re: Is USD safer than EUR to base your account in?
« Reply #1 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.

Offline peeper

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Re: Is USD safer than EUR to base your account in?
« Reply #2 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?

Offline pallruf88

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Re: Is USD safer than EUR to base your account in?
« Reply #3 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.

Offline jaggermikester

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Re: Is USD safer than EUR to base your account in?
« Reply #4 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.

Offline user456

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Re: Is USD safer than EUR to base your account in?
« Reply #5 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.

Offline peeper

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Re: Is USD safer than EUR to base your account in?
« Reply #6 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?

Online donnaforex

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Re: Is USD safer than EUR to base your account in?
« Reply #7 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.
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Offline peeper

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Re: Is USD safer than EUR to base your account in?
« Reply #8 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?

Offline JJ-FX

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Re: Is USD safer than EUR to base your account in?
« Reply #9 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.

Offline peeper

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Re: Is USD safer than EUR to base your account in?
« Reply #10 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.

Offline ECNtrader

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Re: Is USD safer than EUR to base your account in?
« Reply #11 on: October 03, 2012, 11:50:41 AM »
for now i think dollar is more safe.
but i prefer CHF

Offline salsoolo

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Re: Is USD safer than EUR to base your account in?
« Reply #12 on: October 10, 2012, 02:34:03 AM »
whatever fills your boat!

Offline 999cjb

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Re: Is USD safer than EUR to base your account in?
« Reply #13 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.

Offline Darkmatter

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Re: Is USD safer than EUR to base your account in?
« Reply #14 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.
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