Hedging currency risk of foreign stock?

[cNuuuuuu]

Hey guys,

I developed an automated strategy with a holding period of approx. 1-2 weeks. As the account is demoninated in EUR and the stocks it invests is in USD, I am currently thinking about how to minimize the currency risk. I was wondering what you guys are doing? Do you have experience or help with this issue?

Here my two ideas:

1. Convert once the total EUR amount into USD (so i really have USD) and go short USD/EUR to hedge my physical position.

PROs and CONs
+ less prone to errors,
+ minimal transaction costs
- realized profit/loss will not be hedged and needs to be manually hedged


2. Each trade will also open a currency hedge trade, f.e. buy for 1000$ stocks also short USD/EUR for 1000$.

PROs and CONs
+ realized profit/loss will also be hedged
- higher transaction costs
- more prone to errors? (for instance: LMT order of stock is not filled, but hedge transaction is filled, or vice verca...)


I am really thankful for any comment on this issue or how you handle this problem.
Thanks and have a nice day!

cNuuuuuu

[NinjaTrader_Matthew]

NinjaTrader customer service would not be able to comment on this topic as it would be considered trading advice, but we'll gladly keep this thread open for other users to share their experience in this area.