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I would like to buy / sell foreign stocks through any major broker like
Ameritrade or Schwab, bypassing the ADR mechanism entirely and buying the
stock on its foreign exchange. By doing that I gain liquidity and I
hopefully avoid some of the ridiculous fees that some banks charge for
holding ADRs. I'm focused on stocks in Hong Kong, Australia, Italy, and UK.
I assume that each time I buy or sell a stock on its foreign exchange the
broker is doing a currency conversion from a USD dollar account into the
currency of the target country. How much am I going to lose on each
transaction to a bad exchange rate using the broker?
Does any major broker have a mechanism by which I can fund a foreign
currency account and just buy and sell in the native currency of the
country, thereby minimizing the number of times I am subjected to the bad
exchange rate?
In general, what is the best way to set up an account if you want to
actively trade stocks for the long term in a foreign exchange?
--
Will
Interactive Brokers www.interactivebrokers.com permits its customers to trade in
many different markets around the world in real time. US, Toronto, Mexico City,
Tokyo, Sydney, London, Paris, Brussels, Amsterdam, Germany, Sweden, Spain and
Hong Kong are the ones I remember.
"W" <p...@s...com> wrote in message
news:68WdnTjcJPPlYq_UnZ2dnUVZ_jadnZ2d@giganews.com..
.
>I would like to buy / sell foreign stocks through any major broker like
> Ameritrade or Schwab, bypassing the ADR mechanism entirely and buying the
> stock on its foreign exchange. By doing that I gain liquidity and I
> hopefully avoid some of the ridiculous fees that some banks charge for
> holding ADRs. I'm focused on stocks in Hong Kong, Australia, Italy, and UK.
> I assume that each time I buy or sell a stock on its foreign exchange the
> broker is doing a currency conversion from a USD dollar account into the
> currency of the target country. How much am I going to lose on each
> transaction to a bad exchange rate using the broker?
>
> Does any major broker have a mechanism by which I can fund a foreign
> currency account and just buy and sell in the native currency of the
> country, thereby minimizing the number of times I am subjected to the bad
> exchange rate?
>
> In general, what is the best way to set up an account if you want to
> actively trade stocks for the long term in a foreign exchange?
>
> --
> Will
>
>
And how much are you losing the currency conversions for each trade?
That's the core of what I am trying to avoid. If you trade $20K of
assets two round trips (so $80K of currency conversions) and lose 2% to a
bad exchange rate on each trade, you are losing 8% of the account value each
year in the exchange rate. Unless you buy once and hold for four years
the exchange rate becomes a non trivial part of your overall return.
--
Will
"Lubow" <l...@l...com> wrote in message
news:4932fa03$0$25052$ec3e2dad@news.usenetmonster.co
m...
> Interactive Brokers www.interactivebrokers.com permits its customers to
trade in
> many different markets around the world in real time. US, Toronto, Mexico
City,
> Tokyo, Sydney, London, Paris, Brussels, Amsterdam, Germany, Sweden, Spain
and
> Hong Kong are the ones I remember.
>
>
> "W" <p...@s...com> wrote in message
> news:68WdnTjcJPPlYq_UnZ2dnUVZ_jadnZ2d@giganews.com..
.
> >I would like to buy / sell foreign stocks through any major broker like
> > Ameritrade or Schwab, bypassing the ADR mechanism entirely and buying
the
> > stock on its foreign exchange. By doing that I gain liquidity and I
> > hopefully avoid some of the ridiculous fees that some banks charge for
> > holding ADRs. I'm focused on stocks in Hong Kong, Australia, Italy, and
UK.
> > I assume that each time I buy or sell a stock on its foreign exchange
the
> > broker is doing a currency conversion from a USD dollar account into the
> > currency of the target country. How much am I going to lose on each
> > transaction to a bad exchange rate using the broker?
> >
> > Does any major broker have a mechanism by which I can fund a foreign
> > currency account and just buy and sell in the native currency of the
> > country, thereby minimizing the number of times I am subjected to the
bad
> > exchange rate?
> >
> > In general, what is the best way to set up an account if you want to
> > actively trade stocks for the long term in a foreign exchange?
> >
> > --
> > Will
> >
> >
>
I don't trade spot currencies so I'm not sure about the bid/ask spreads IB
quotes, but from my limited experience in forex, IB's b/a spreads are extremely
competitive compared to any bank.
There are no problems with buying stocks listed on a foreign exchange on margin
then waiting for a favorable exchange rate to cover your purchase. IB will
provide you with bid and ask quotes for the foreign currency in which you had
traded.
But if your concern is the exchange rate, then buy the freakin' ADR and forget
about the cut the sponsor pulls out of your dividends. Don't forget that in
some cases, the ADR is selling at a lower price than the underlying stock.
BTW, IB does not trade stocks on any Italian bourse.
"W" <p...@s...com> wrote in message
news:dPCdndytrrhYhK7UnZ2dnUVZ_s3inZ2d@giganews.com..
.
> And how much are you losing the currency conversions for each trade?
> That's the core of what I am trying to avoid. If you trade $20K of
> assets two round trips (so $80K of currency conversions) and lose 2% to a
> bad exchange rate on each trade, you are losing 8% of the account value each
> year in the exchange rate. Unless you buy once and hold for four years
> the exchange rate becomes a non trivial part of your overall return.
>
> --
> Will
>
>
> "Lubow" <l...@l...com> wrote in message
> news:4932fa03$0$25052$ec3e2dad@news.usenetmonster.co
m...
>> Interactive Brokers www.interactivebrokers.com permits its customers to
> trade in
>> many different markets around the world in real time. US, Toronto, Mexico
> City,
>> Tokyo, Sydney, London, Paris, Brussels, Amsterdam, Germany, Sweden, Spain
> and
>> Hong Kong are the ones I remember.
>>
>>
>> "W" <p...@s...com> wrote in message
>> news:68WdnTjcJPPlYq_UnZ2dnUVZ_jadnZ2d@giganews.com..
.
>> >I would like to buy / sell foreign stocks through any major broker like
>> > Ameritrade or Schwab, bypassing the ADR mechanism entirely and buying
> the
>> > stock on its foreign exchange. By doing that I gain liquidity and I
>> > hopefully avoid some of the ridiculous fees that some banks charge for
>> > holding ADRs. I'm focused on stocks in Hong Kong, Australia, Italy, and
> UK.
>> > I assume that each time I buy or sell a stock on its foreign exchange
> the
>> > broker is doing a currency conversion from a USD dollar account into the
>> > currency of the target country. How much am I going to lose on each
>> > transaction to a bad exchange rate using the broker?
>> >
>> > Does any major broker have a mechanism by which I can fund a foreign
>> > currency account and just buy and sell in the native currency of the
>> > country, thereby minimizing the number of times I am subjected to the
> bad
>> > exchange rate?
>> >
>> > In general, what is the best way to set up an account if you want to
>> > actively trade stocks for the long term in a foreign exchange?
>> >
>> > --
>> > Will
>> >
>> >
>>
>
>
"W" <p...@s...com> wrote in message
news:dPCdndytrrhYhK7UnZ2dnUVZ_s3inZ2d@giganews.com..
.
> And how much are you losing the currency conversions for each trade?
> That's the core of what I am trying to avoid. If you trade $20K of
> assets two round trips (so $80K of currency conversions) and lose 2% to a
> bad exchange rate on each trade, you are losing 8% of the account value
> each
> year in the exchange rate. Unless you buy once and hold for four years
> the exchange rate becomes a non trivial part of your overall return.
>
You have the concept all wrong. You convert your $20K into Euros and keep it
in Euros. You do all your buys and sells in Euros without converting back to
USD. Same goes for JPY or any other currency. Very easy to do at Interactive
Brokers.
"catalpa" <c...@e...org> wrote in message
news:VyHYk.2046$us6.1828@nwrddc01.gnilink.net...
>
> You have the concept all wrong. You convert your $20K into Euros and keep it
> in Euros. You do all your buys and sells in Euros without converting back to
> USD. Same goes for JPY or any other currency. Very easy to do at Interactive
> Brokers.
This guy wants it both ways. He does not want to pay the b/a forex spread but
he does not want the ADR custodian to take a cut of the dividends.
Do us a favor, Dubya and stick to CDs. You will probably come out ahead.
"catalpa" <c...@e...org> wrote in message
news:VyHYk.2046$us6.1828@nwrddc01.gnilink.net...
> "W" <p...@s...com> wrote in message
> news:dPCdndytrrhYhK7UnZ2dnUVZ_s3inZ2d@giganews.com..
.
> > And how much are you losing the currency conversions for each trade?
> > That's the core of what I am trying to avoid. If you trade $20K of
> > assets two round trips (so $80K of currency conversions) and lose 2% to
a
> > bad exchange rate on each trade, you are losing 8% of the account value
> > each
> > year in the exchange rate. Unless you buy once and hold for four
years
> > the exchange rate becomes a non trivial part of your overall return.
> >
>
> You have the concept all wrong. You convert your $20K into Euros and keep
it
> in Euros. You do all your buys and sells in Euros without converting back
to
> USD. Same goes for JPY or any other currency. Very easy to do at
Interactive
> Brokers.
That's exactly what my proposal was, and I was arguing against converting on
each trade.
In the Interactive Brokers implementation of this idea, do you see each of
the cash holdings in different currencies as a separate money market fund
accounts, or do they split off the separate currencies to different
accounts?
Do you know if Ameritrade or Schwab does something similar?
--
Will
"Lubow" <l...@l...com> wrote in message
news:4933433e$0$24999$ec3e2dad@news.usenetmonster.co
m...
> "catalpa" <c...@e...org> wrote in message
> news:VyHYk.2046$us6.1828@nwrddc01.gnilink.net...
> > You have the concept all wrong. You convert your $20K into Euros and
keep it
> > in Euros. You do all your buys and sells in Euros without converting
back to
> > USD. Same goes for JPY or any other currency. Very easy to do at
Interactive
> > Brokers.
>
> This guy wants it both ways. He does not want to pay the b/a forex spread
but
> he does not want the ADR custodian to take a cut of the dividends.
Not correct. I want to pay the spread once for the account and not once per
trade.
--
Will
IB permits you to hold cash in any currency in which stocks are traded. E.g.,
you can have in your account Aussie dollars, Euros, British pounds, Swiss
francs, HK dollars, Japanese yen, Swedish krona, Mexican pesos. IB requires you
to have at least $10K in your currency to get interest on your money, if at all.
hope that settles it.
I know of no other online discounters that permit multiple currencies to be held
in a single account.
>
> That's exactly what my proposal was, and I was arguing against converting on
> each trade.
>
> In the Interactive Brokers implementation of this idea, do you see each of
> the cash holdings in different currencies as a separate money market fund
> accounts, or do they split off the separate currencies to different
> accounts?
>
> Do you know if Ameritrade or Schwab does something similar?
>
> --
> Will
>
>
Many foreign stocks also trade in the Pink Sheets, even though they
trade on major foreign exchanges. Some famous examples are Nestle and
Roche. If Americans want to trade it, it's generally available somehow.
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