So my portfolio is heavily in US Stocks; some are long holds, and some I’m swing trading. I track the movements of these stocks in TradingView for better accuracy of entry points and where they’re at overall.
The last few days, all these stocks have been performing well. BUT… I look in Freetrade, and they’re all sliding lower and lower. Why? Because the USD has slid from $1.37 down to $1.33. On £5,000, that’s £200 of loss (plus, whatever else Freetrade charge on stuff).
So, questions…
How do you guys hedge against this kind of thing?
Does anyone stick to just UK stocks instead?
Are there better apps for people who prefer US Stocks for investing?
Have to disagree here, the stronger the dollar means your investment will be worth more. So maybe recheck what your are looking at.
To simply your example, if your stocks were worth $5000, and the fx rate reached 1 to 1, then you shares would be worth £5000. if the rate changed to $2 to £1, then you share value will drop to £2500. So, as you have mentioned the rate moved from 1.37 to 1.33, this should have increased your portfolio value in £.
So when you buy, you share will be worth $150 usd irrespective of the subsequent fx rate. Only thing impacting it will be the share price in its usd value.
The gbp value will move everyday but will only matter when you sell. When you sell, it will be turned into gbp at the prevailing rate.
The gain or loss, will be as per my prior message.
And your example where you spent £100 and got $150 usd worth of stock. New value at the Fx rate of 1.25, will be $150 / 1.25. So will be worth £120. So you gain.
I don’t hedge it specifically. Not worth it in my experience.
If the £ gets stronger then my buying power increases (salary in £), if £ gets weaker then my $ portfolio is worth more in £. Suppose that is a hedge of sorts.