Currency conversion charges in FX trading?

[telstrareg]

With FOREX trading, in addition to the spread is there any charge for currency exchange? Eg if I'm trading EURUSD with a market maker, the spread is quite small (0.00030) however if my account is in AU dollars, provided I use an Australian market maker, do I have to do any currency exchange for the margin? If so, I'm guessing this could be dearer than the actual spread.

 

[telstrareg]

It seems that in most cases, no exchange is necessary. The market maker will let you open an account in your local currency and then you can seamlessly trade dollar, pound, zloty - whatever turns you on.

 

[brendan87]

Hi all.
I've often wondered this and I have made a few enquiries. For eg. If you trade AUD/USD and you go long AUD, to close the position you 'buy' USD - and your profit is in USD. Alternately shorting AUD, closing the position you 'buy' AUD and your profit is in AUD. So it depends which way you are trading. But depending on which pairs you trade, your profits could be in any currency - the second currency (AUD/USD) if you are long, and the base currency (AUD/USD) if you are short. Most forex accounts let you have multiple currencies, but they will charge you to convert back to whichever currency you want to withdraw - usually the rates are quite good - like an interbank rate. Sometimes there is a commission for the conversion. I know the case for IG markets its 1.5% to convert currencies in your account. When I discovered this additional cost - which takes effectively 1.5% of your profits and makes any losses 1.5% worse I looked overseas for a forex platform - but found that they only accepted USD deposits, which meant the cost of converting my AUD into a USD ITT was hell expensive (and the conversion was at retail rates, plus the cost of an ITT. Therefore I settled on an Australian provider and just wear the 1.5%. I hope this is helpful but you really have to ask your provider about how they exchange foreign currency.

 

[telstrareg]

I could live with 1.5% out of my profits, but not 1.5% on top of the trade!