Your account currency plays an important role in how deposits, withdrawals, and trading results are calculated. MH Markets offers USD-denominated trading accounts. Here’s what you need to know:
The account currency is the base currency of your trading account. All balances, profits, losses, and margin requirements are displayed in this currency.
How Does Account Currency Affect Deposits and Withdrawals?
If you fund your account in a currency different from USD, the amount will be converted automatically at the current exchange rate. Similarly, when withdrawing funds to a payment method in another currency, conversion will occur based on the current rate.
Impact on Profit and Loss (P&L)
Trading instruments are often quoted in different currencies. When you close a trade:
- The profit or loss is first calculated in the quote currency of the instrument.
- It is then converted into your account currency using the current exchange rate.
This means fluctuations in exchange rates can slightly affect your final P&L when trading instruments outside your account currency.
Scenario 1: Quote Currency is USD
Let’s go through an example together.
Your account currency is USD. Imagine you open a Buy order of 1 lot on EUR/USD at 1.1000 and close it at 1.1050.
Now, calculate the profit based on the difference in pips. (If you’re unsure how to calculate pip value, check our article “How to Calculate Pip Value”)
- The difference between the open and close prices is 50 pips in your favor.
- For 1 lot, each pip is worth $10, so your profit is:
50 pips × $10 = $500.
Scenario 2: Quote Currency is Different (e.g., GBP/JPY)
Let’s look at another example.
You open a Sell order of 1 lot on GBP/JPY at 185.00 and close it at 184.50.
The difference between the open and close prices is 50 pips in your favor. For GBP/JPY, each pip for 1 lot equals ¥1,000, so your profit is: 50 pips × ¥1,000 = ¥50,000 (in Japanese Yen).
Since your account currency is USD, this amount needs to be converted.
If the exchange rate at closing is USD/JPY = 184.50, this means:
1 USD = 184.50 Japanese Yen.
So, if your profit is in JPY and your account currency is USD, you divide the amount in JPY by the exchange rate:
- Profit = ¥50,000
- Rate = USD/JPY = 184.50
- Conversion: ¥50,000 ÷ 184.50 = $271 credited to your account.