How to avoid currency risk in transfers to IBKR

Are you a Darwinex client with a Wallet in EUR and GBP interested in depositing funds in IBKR (USD)? In this short article we will explain step by step how to cover your currency risk.

Steps if you have an EUR-based Wallet

Having a Darwinex Wallet in EUR and having to request the transfer to IBKR in USD, the main risk that exists is that during the process the destination currency, the USD, will be revalued. To avoid this risk follow these steps:

  1. Open your MT4/MT5 account
  2. Open the EURUSD pair
  3. Open a short trade in the EURUSD with a volume similar to the transfer you will make to IBKR. Note that each short microlot on the EURUSD (0.01) is equivalent to selling 1,000 EUR to buy USD. This means that if you decide to transfer 10,000 EUR from Darwinex to IBKR, to cover 100% of the currency risk, you will have to open 0.10 lots. In case you want to transfer 25,000 EUR, you would have to open 0.25 short lots in EURUSD
  4. Close the operation at the moment of confirmation of the arrival of your funds at IBKR. Remember that these funds will be converted to USD upon arrival at IBKR so you should close the EURUSD short trade as soon as possible.

Steps if you have a GBP-based Wallet

  1. Open your MT4/MT5 account
  2. Open GBPUSD
  3. Open a short trade in the GBPUSD with a volume similar to the transfer you will make to IBKR. Note that each short trade in the GBPUSD (0.01) is equivalent to selling 1,000 GBP to buy USD. This means that if you decide to transfer 10,000 GBP from Darwinex to IBKR, to cover 100% of the currency risk, you will have to open 0.10 lots. In case you want to transfer 25,000 Euros, you would have to open 0.25 short lots in GBPUSD.
  4. Close the operation at the moment of confirmation of the arrival of your funds at IBKR. Remember that these funds will be converted to USD upon arrival at IBKR so you should close the GBPUSD short trade as soon as possible.

Please do not hesitate to contact us at info@darwinex.com if you have any questions.