Good morning, just a quick question:
The same way we can reduce cost average by buying more stocks when the price is down. I wonder if it will work with the FX impact?
Example: My account is in GBP and I bought 1 US stock at price 1GBP with an exchange rate GBP1-USD1.
Then 2 weeks later the exchange ratio drops to GBP1-USD 0.5
If I buy again when the exchange ratio is lower than the first time I bought… would it reduce my average FX impact?
DCA will work providing your profits are > than the FX impact…I had instances where my profits were < than my FX impact therefore resulting in a negative return at that present moment…I must say it can sometimes work in your favour.
Depending on how much you’re investing & how long for I wouldn’t worry about FX impact, you could also trade on days when the GBP:USD rate are more favourable but I think that will be a waste of time and opportunity
I asked the same question here: Markets up, profits down
The answer is ‘yes’ by all accounts