The silent role of the account currency

[Shadow Trader]

A trader funds an account in euros and trades USDJPY. Every pip made or lost is calculated in yen, converted to dollars, then converted to euros.

Two things follow. First, the value of one pip shifts slightly with exchange rates, which affects position sizing precision. Second, there is a quiet exposure. If euros weaken against dollars while the trade is open, the profit in euro terms rises or falls independent of the trade outcome.

For scalpers with short holding times, the effect is small. For anyone holding positions longer, or running a large account in a currency unrelated to the traded pairs, it becomes noticeable.

Some brokers also charge a conversion fee when profits are credited in a different currency from the instrument. That fee, usually small, is worth knowing.

Matching the account currency to the main traded quote currency simplifies things, though it is rarely a deciding factor.

Which account currency is used here, and does it match the pairs traded?