I am still a learner at the pipsology school and have not started trading, can someone please explain how this works (I can’t find a satisfying answer anywhere): If I want to trade a pair that does not include my margin account currency I suspect I get exposed to 2 different fluctuations, one on the rate of the pair I am placing a trade on and another between my account currency and at least one part of the pair traded. So I am in UK, open a margin account in GBP and say I go long on EUR/USD and it’s moving in my favour. But while my position is live GBP/USD is going down and when I exit my winning is neutralized by the loss on GBP/USD exchange…
Question 1: correct? The broker has to change the currency of profit or loss back into GBP.
Question 2: in my example is it really GBP/USD that’s causing me trouble or EUR/GBP? Or both, one for long and the other for short?
Question 3: isn’t it less risky to only trade pairs with GBP?
Hope it makes sense and thank you .
Hi @TTH,
We addressed your questions in an earlier discussion. You can see our responses here: Question about selling and buying
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Thanks for this, that addresses my question exactly and apologies for not finding it without asking. In fact I kinda guessed it was so, the all important bit is When speculating on the rate, you do not physically exchange one currency for another until I read this on a brokers terms (Axitrader) “Be aware of currency risk: If your account currency is different to the profit or loss currency then you will also have additional currency risk in trading this product dependent on the exchange rate between the two currencies”. It made me wonder… Thanks again
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