Account currency in gold trading

Account currency is the currency in which a trading account’s balance, equity and margin are expressed, chosen when the account is opened. Common choices are USD, EUR, GBP and a few local currencies.

How it applies to gold trading

XAUUSD is priced in dollars, so every profit, loss, swap and margin figure is first calculated in dollars and then converted to the account currency at the current rate. With a USD account there is no conversion. With a EUR or GBP account, the value of your gold position in your own currency also moves with the exchange rate, and margin requirements change as the rate changes.

This creates a hidden second trade. A euro-based trader long gold is also, in effect, long dollars on the profit and margin. Some platforms also apply a small conversion markup.

Worked example

Example (hypothetical numbers): a EUR account makes $500 on a gold trade. At EURUSD 1.0800 that is about 463 euros. If EURUSD were 1.1000 at the close, the same $500 would be about 455 euros. The gold trade was identical; only the conversion changed.

The same applies to costs. Commissions and swaps quoted in dollars are converted too, so a cost table read in dollars will not match the figures on a euro or pound statement exactly. Keep a note of the rate used when you compare months.

A common mistake

Using a dollar position-size calculation in a non-dollar account without converting the risk amount. Convert your euro or pound risk into dollars first, then size the trade.

See also: Profit and loss, Gold crosses, Margin, Position sizing.

Frequently asked questions