Account currency conversion: the fee hiding in P&L

[Shadow Trader]

Trading EURUSD on an account denominated in EUR or GBP means each profit and loss gets converted from USD into the account currency. The conversion happens at the broker's rate, which isn't always the market rate.

Some brokers apply a markup to the conversion. A tenth of a pip on a dollar-to-euro conversion is easy to miss on a single trade. Across hundreds of trades, it's a hidden spread.

The effect is largest for scalpers, who turn over capital fast and generate many small P&L conversions. A strategy that averages 1 pip per trade before conversion might lose 0.1 pip to it, a 10 percent haircut.

A check: pick a trade, convert the profit manually using the market rate at close time, and compare to the amount credited. Do it for several trades. A consistent shortfall indicates a markup.

Some traders choose to hold their account in USD if trading USD pairs, to avoid the conversion. Others find the swap or deposit fees outweigh the savings. The best choice depends on the numbers, not a rule.

Is the account currency matching the quote currency of the main pair traded, and did it make a difference?