Thread: Base Currency of Trading Account

Hi guys, would like to discover, if I open a trading account with a base currency of SGD (money saved in SGD), also I go long over the EUR/USD pair.

Can the broker automatically convert my SGD capital to USD first prior to going long on the transaction (buying EUR with USD)?

If so, wouldn't I make some reductions in the event the USD loses its worth against the SGD later at the end of the commerce?

What usually happens in these situations? Hope someone can help me out with this.

Thanks Beforehand!

Yes, broker automatically converts your SGD to USD to go in currency and yes, you'll lose if USD/SGD rate drops while your standing is open. The same occurs when traders using account commerce with EUR/GBP, GBP/JPY along with other currency pairs.

Thank You for the Answer! Are there any ways we can minimize such losses?

I don't think so. You merely have to take into account not only the tendency in the currency pair that you trade (Y/X) but also the tendency in X/SGD in your case. But since the loss/gain from the pair is not leveraged with the broker, the size of this is not very significant.