Trading US Stocks (GBP to USD Rate Related)

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?

Also, it would be nice to see the current FX rate on the order screen, the same way you see the share price.

T212 do this very well I think. They’ll show the effect of FX on your holding as well as the price movement of the stock.

There’s already a thread for it, stick your vote on there!

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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 £.

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So, let’s say I buy £100 of ABC which is a US Stock…

At the time of buying, let’s assume the rate is £1 = $1.50. I therefore own $150 worth of ABC.

Let’s assume the stock price doesn’t move, but USD sinks - £1 = $1.25… I now own $125 of ABC.

How am I better off?

Would you not still own £100 in ABC in both scenarios? The only thing that would change is the $ value.

So what happens when I sell my shares, given the exchange rate move?

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.

Ahhhh I see… so that gain won’t actually be visible (in the portfolio), and I won’t be able to quantify that gain until I sell?

Gain will be visible, as your portfolio is shown in GBP.

Today is a good example, US holiday - so share prices shouldn’t move… but fx rate will.

I am not sure how frequently freetrade update the fxrate for the conversion on the portfolio view screen.

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.