Hello, I suck at math so I am hoping someone can help me out here. If I buy shares of a US stock at 20 dollars USD per share, at the current exchange rate of 1 CDN = 0.79 USD, and in 6 months sell the stock for 20 dollars per share, have I made or lost money in this scenario? Please exclude any rates brokerages charge to convert currency from CDN to USD, and then back from USD to CDN. I only want to know about the fluctuation of the exchange rate in the example above. If someone could explain in a bit of detail that would be really appreciated. I'm a useless History major who really sucks at math. Thanks for any help or advice.
Typically your trading account has a CAD and USD account. US stocks are traded in the USD account. Canadian stocks stay Canadian. If you are converting between the two, then obviously you are subjected to currency fluctuations. If you US stock goes +10%, but then the US dollar drops 10%, and you sell and convert to Canadian dollars, you have not made anything value wise in your account.
Hi Jock-e Thanks for your reply but that doesnt answer my question. I buy a 20 dollar stock in USD when the exchange rate is 1cdn to 0.79usd, and then I sell the same stock at the exact purchase price of 20 dollars USD but now the exchange rate is 1cdn is worth 0.69usd. Have I made or lost money based on the difference in exchange rate only. Nevermind fees, or stock price appreciation or depreciation. I only want to know about the change in exchange rate when I buy and sell 1:0.79 to 1:0.69. I suck at math and can't get my head around this.
I wish to point out, you can use the Norbert Gambit to exchange CAD/USD without FX fees. We have quite a bit of exposure to CAD/USD fluctuations and it has been significant, over time.
