How can I trade USDCHF with a Euro based account?

Hi All,

I’m new to the forex markets, a basic knowledge is needed for my job, so I started to learn.
I think I have a bit of a confusion here…
Imagine I have an account which says my balance is X Euros.
Now, what exactly happens when I place an order of, say, “sell 100 USDCHF”?
I’ve read that buying 100 USD/CHF means that I kind of change a hundred bucks to Swiss francs… is that right?

Than how is this done? I mean, I have Euros… how can I sell dollars? Does that get exchanged before?

Any help would be appreciated.

Hey Hakamiro Nakamura,

Don’t worry about it. Your Broker will convert it to your trading currency. :smiley:

So you say that there are an additional event in the chain which I actually don’t see:

  1. I open an account with Euros in my deposit
  2. I place on order ‘sell 100USDCHF’
    (3. My broker converts a 100 dollar worth of euros from my account to dollars and sells them to by a 100 dollar worth of Swiss francs)
  3. I see that I actually went short on the EURCHF

Is that right?

No.

Your broker/platform never really converts anything, but does a calculation at the open of your trade to determine how much margin will be used based on current exchange rates of your account currency, to the currencies you are opening a trade in.

When you hit “enter”, on a USD/CHF trade, you have bought a contract to exchange your currency at a later date. You don’t actually own any currency yet. In fact, you never will. Depending on how long that trade stays open, you will pay a “rollover” rate to keep the contract you bought, open at the amount you entered the trade at. When you “sell” the USD/CHF, you’ve not “sold” anything. Technically speaking, you’ve bought the last half of the pair, so you think the franc will increase in value against the dollar.

If in two days, the franc is indeed worth more than it was when you opened the trade, and you hit the “close” button, you’ve earned the difference between the open and close price during the duration of your open trade, and closed the contract, but you’ve never had your money converted. The payout to you will be in euros, because you’ve never been “out” of the euro.

Thank you, Master Tang for the answer.

So, I conclude now, that I can handle a currency pair as an atomic whole, a standalone asset that I trade, rather than a pair of assets, right?

I think Master Tang answered that question :slight_smile:

you can view it in both ways.
it is a pair of assets because a currency pair involves two competing currencies of two countries.