Choosing an Account Currency in Overseas FX: USD, JPY and EUR Compared
When opening an overseas FX account, are you unsure whether to choose USD or JPY as the account currency?
In short, choose based on the currency pairs you trade and how you deposit and withdraw, and if in doubt, a USD account is the easiest to follow.
This article explains how profit and loss are converted and how to think about currency exchange. By the end, you can decide which account currency suits you.
In short: choose the account currency to fit your trading and deposits
- The account currency is the currency in which your balance and profit and loss are shown and managed
- Profit and loss are converted into the account currency each time you close a trade and reflected in your balance
- USD is intuitive if you mainly trade dollar pairs, and JPY if you mainly trade yen crosses
- Changing it after opening is often difficult, so adding an account in another currency is the usual approach
What is the account currency (base currency)?
The account currency is the currency in which your account balance and profit and loss are managed. It is also called the base currency or the account's denomination currency.
For example, on a USD account your balance is shown in dollars, such as 1,000 USD. Both the funds you deposit and your trading profit and loss are handled in this currency.
The currencies you can choose differ by broker and account type. Besides USD, JPY and EUR, some brokers offer other currencies.
| Account currency | Balance display example | Currency pairs that need no conversion |
|---|---|---|
| USD | 1,000 USD | EUR/USD, GBP/USD, AUD/USD and others (settlement currency is USD) |
| JPY | Balance in yen | USD/JPY, EUR/JPY and others (settlement currency is yen) |
| EUR | 1,000 EUR | Currency pairs settled in EUR |
How profit and loss are converted into the account currency
Profit and loss on a currency trade arise in the settlement currency of the pair. When you close the trade, that profit or loss is converted into your account currency automatically.
The settlement currency of EUR/USD is USD. On a USD account no conversion is needed, and a 1 pip move on 1 lot is about 10 USD of profit or loss.
If you make the same trade on a JPY account, 10 USD is converted into yen at the rate when you close, and that amount goes into your balance. Because the conversion rate changes every time, the yen profit or loss is not constant even for the same price move.
| Account currency | EUR/USD 1 lot rises 10 pips | Conversion |
|---|---|---|
| USD | Profit of 100 USD | None (reflected as is) |
| JPY | 100 USD converted into yen at the rate when closed | Yes (the yen amount changes with the rate) |
| EUR | 100 USD converted into EUR at the rate when closed | Yes (the EUR amount changes with the rate) |
Comparing USD and JPY accounts
The main differences between USD and JPY accounts are the effect of exchange rate moves and how profit and loss look. Where currency exchange occurs also changes with how you deposit and withdraw.
| Item | USD account | JPY account |
|---|---|---|
| How the balance looks | In dollars, separate from a yen sense of value | In yen, easy to match with daily life in Japan |
| Exchange rate moves on deposits and withdrawals | If you deposit in dollars, your dollar balance does not rise or fall with the rate | If you deposit or withdraw in dollars, the rate at that time affects your result |
| Exchange cost | None if you deposit and withdraw in dollars; exchange occurs if you use yen | None if you deposit and withdraw in yen; exchange occurs if you use dollars |
| Profit and loss on dollar pairs | Easy to read with no conversion | Converted into yen each time |
| Profit and loss on yen crosses | Converted into dollars each time | Easy to read in yen as is |
Here is an example of the effect of exchange rate moves. A balance of 1,000 USD is worth about ¥157,000 at 1 USD = ¥157.
If the rate moves to 1 USD = ¥150, the same 1,000 USD falls to about ¥150,000. On a USD account the balance does not change, and the difference appears when you convert back to yen.
Choosing by fit with the currency pairs you trade
It is easiest to choose the account currency by its fit with the pairs you mainly trade. If it matches the settlement currency, profit and loss look simple.
- Mainly dollar pairs (EUR/USD, GBP/USD and others): a USD account shows profit and loss as is
- Mainly yen crosses (USD/JPY, EUR/JPY and others): a JPY account is intuitive in yen
- You also trade gold or indices: many are settled in USD, so a USD account is easier to read
- You use several currency pairs: standardizing on a USD account makes comparing profit and loss easier
On yen crosses, a 1 pip move on 1 lot is ¥1,000 of profit or loss. On a USD account, that is converted to about 6.4 USD.
If in doubt, decide by your main currency pair
Matching the settlement currency of the pair you trade most reduces the number of conversions. Fewer conversions also make profit and loss look more consistent.
The account currency is hard to change after opening
After you choose the account currency at opening, you often cannot change it. Even brokers that accept changes generally attach conditions.
If you want to change currency, the usual way is to open an additional account in another currency. Some brokers let you hold several accounts.
- 1
Check whether a change is possible
Check on the official page or with support whether the account currency can be changed.
- 2
Open an additional account
Create a new account in the currency you want. The maximum number of accounts differs by broker.
- 3
Move your funds
Check whether transfers between accounts are available, or whether you need to withdraw and deposit again.
- 4
Tidy up the old account
Confirm there are no positions or balance, then tidy up accounts you no longer use.
Deposit and withdrawal methods and when currency exchange occurs
If the currency a deposit or withdrawal method supports differs from your account currency, currency exchange occurs. The exchange rate and cost differ by method.
| Deposit or withdrawal currency | USD account | JPY account |
|---|---|---|
| Deposit or withdraw in USD | No exchange | Exchange |
| Deposit or withdraw in JPY | Exchange | No exchange |
| Deposit or withdraw in other currencies | Exchange | Exchange |
- The exchange rate may include a markup
- If you exchange on both deposit and withdrawal, the cost can apply twice
- Check fees and exchange costs on the official page for each method
We cover deposit and withdrawal methods in detail in another article. Choosing the method first and then the account currency is also a valid order.
Tax and cashback points to note
Residents of Japan are said to need to convert foreign-currency profit and loss into yen when filing. How the conversion method and timing are handled differs by situation. This section is written for residents of Japan.
A yen conversion can be needed whichever account currency you use, so it helps to keep your trading history. For the specific treatment, check with an expert such as a tax accountant or the National Tax Agency of Japan.
Cashback is often credited in the account currency. However, the currency and how it is credited differ by broker.
Return amounts are not yet confirmed, and we will post them on each broker's page at launch. Check the currency in which you receive returns together with the official page.
- Keep your trading history and deposit and withdrawal records by currency
- Check with an expert before deciding on tax treatment
- Check the currency of cashback payments on each broker's page
Enter a currency pair and lot size to check the value of 1 pip in USD. It is a useful guide before you decide on an account currency.
Calculate the value of 1 pipFAQ
Q.What is the account currency in overseas FX?
It is the currency in which your account balance and profit and loss are managed, also called the base currency. You choose it at opening from options such as USD, JPY and EUR. Available currencies differ by broker and account type.
Q.Can I change the account currency in overseas FX later?
Often you cannot. If you want to change currency, the usual way is to open an additional account in the currency you want. Whether it is possible and the conditions differ by broker, so check the official page.
Q.Which is better, a USD account or a JPY account?
USD is easier if you mainly trade dollar pairs, and JPY if you mainly trade yen crosses. Matching the currency you deposit and withdraw in also reduces the number of exchanges. If in doubt, a USD account is a good starting point.
Q.What happens if I deposit in a currency different from my account currency?
Currency exchange occurs, and its rate and cost are reflected. Conditions differ by method, so check the official page before depositing or withdrawing. Fewer exchanges help keep costs down.
This article is for information purposes only and is not investment advice. Conditions may change, so please check each broker's official page for the latest information. Offshore FX and CFD trading carries a risk of losses exceeding your principal.
