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Protecting my Canadian account value

  • #1
  • First Post: Sep 13, 2010 11:36am Sep 13, 2010 11:36am
Hello

Here is a rookie question

I'm a Canadian citizen. I want to open an account with a foreign broker. Broker will accept only account in USD$ or EURO

Now, let say that i open an account in USD and the USDCAD value change over time, i may lost even if my account show a gain since i can only spend Canadian dollars and my gain/lost is in USD.

So my question is, how do i protect my Canadian$ value again fluctuation? Do i issue a USDCAD order for all transaction that i will do?

Hope I'm clear ennough. Excuse my English, I'm more fluent in French.

Martin
  • #2
  • Edited Sep 14, 2010 7:49am Sep 13, 2010 1:26pm | Edited Sep 14, 2010 7:49am
You can reduce your risk by hedging. Open a short position on usd/cad by the same amount of your initial deposit.
Measure twice, cut once
  • #3
  • Sep 13, 2010 2:57pm Sep 13, 2010 2:57pm
Martin,

I am CDN also. I went through the same thing as you are thinking about now.

aediaz1's solution is correct and it is the most suggested.

To be totally frank with you it does not matter unless you have an extremely large account. At current levels, it would even be to your benefit to have a USD account. I don't believe that the USDCAD rate will stay near parity for a long time. So right now the USD is pretty cheap by CAD standards.

The other option is to find a broker that permits CAD...Dukascopy, Oanda, FXCM(UK), IKON,ODL

Just go to www.100forexbrokers.com and use their advanced search feature. Under Account Specifications select Account Currency and make it CAD. It will show about 30 brokers that accept it.
  • #4
  • Edited 3:51pm Sep 13, 2010 3:32pm | Edited 3:51pm
SHORT usd/cad if you want to protect against falling USD or rising CAD. Short, not long or you will have the opposite effect!

Whether a falling USDCAD (the scenario you fear) will actually happen is of course a completely different question.
  • #5
  • Sep 13, 2010 3:47pm Sep 13, 2010 3:47pm
Quoting arjfca
Hello

Here is a rookie question

I'm a Canadian citizen. I want to open an account with a foreign broker. Broker will accept only account in USD$ or EURO

Now, let say that i open an account in USD and the USDCAD value change over time, i may lost even if my account show a gain since i can only spend Canadian dollars and my gain/lost is in USD.

So my question is, how do i protect my Canadian$ value again fluctuation? Do i issue a USDCAD order for all transaction that i will do?

Hope I'm clear ennough. Excuse my English, I'm more fluent...
Arjfca, I agree. It's better to exchange your CDN to USD$ right now and just conduct all your transactions in USD$. Eventually, USD$ will be more expensive than CDN$ and you would've made a good investment. This is what most of Canadian traders do.

Think of the purchase power of your profit in USD$, think of how much you can buy in Canada if you had earned the same amount of money in CDN!!
Make your losses in demo. Earn your profits live.
  • #6
  • Sep 14, 2010 7:49am Sep 14, 2010 7:49am
Quoting 7bit
SHORT usd/cad if you want to protect against falling USD or rising CAD. Short, not long or you will have the opposite effect!

Whether a falling USDCAD (the scenario you fear) will actually happen is of course a completely different question.
Yes, of course I meant short, sorry for mixing up.
Measure twice, cut once
  • #7
  • Last Post: Sep 14, 2010 9:37am Sep 14, 2010 9:37am
Quoting flyer415
Martin,

I am CDN also. I went through the same thing as you are thinking about now.

aediaz1's solution is correct and it is the most suggested.

To be totally frank with you it does not matter unless you have an extremely large account. At current levels, it would even be to your benefit to have a USD account. I don't believe that the USDCAD rate will stay near parity for a long time. So right now the USD is pretty cheap by CAD standards.

The other option is to find a broker that permits CAD...Dukascopy, Oanda, FXCM(UK), IKON,ODL

Just...

Thank you flyer4156 and all others.
Martin
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