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Sizing a EUR/JPY Short with a USD Account Balance

Article Quant Q&A · Author: Tom Hunter
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Summary

The document explains how to estimate the units of a EUR/JPY spot short when the account balance is denominated in USD. The key step is to convert the available USD balance into the base currency, EUR, using the EUR/USD exchange rate. In the example, dividing a $100 balance by a stated EUR/USD rate of 1.1145 gives about 89.7 EUR, which is close to the observed trade size of 89 units.

The answer also explains that the relevant conversion side depends on the transaction: acquiring EUR with USD uses the offered price. The material addresses an unleveraged position using the entire balance, but does not fully detail broker-specific margin, fees, contract conventions, or execution effects. A second answer makes a separate claim about minimum trade sizes, so practical sizing should be checked against the broker’s rules.

Key ideas

  • Convert the USD balance into the EUR base currency to estimate EUR/JPY units.
  • Divide the account balance by the EUR/USD rate to find the approximate EUR amount.
  • Use the offered price when buying EUR with USD for the conversion.
  • Broker minimum sizes and trading conventions can affect the practical order size.

Tags

ForexPosition sizingExecution
Full text
# Calculating units in a cross currency short trade


# Calculating units in a cross currency short trade












If I have a forex account with a broker and a balance of 100 USD, and I'd like to short EUR/JPY, how many units can I short? How is this calculated? Which currency pair do I use to translate between my account balance in USD and the currencies involved in the EUR/JPY instrument? Which price (bid or ask) do I use in each part of the calculation?

(Please assume I'd like to use my entire USD balance and I'm not using leverage.)

Through trial and error I can see that I need to enter 89 in the Units field to get a Trade value of (approximately) $100, but I'd like to know how to calculate this.

## Answer by rupweb (score 1, accepted)

https://quant.stackexchange.com/a/17743

For spot EURJPY with a USD risk currency, the EUR is expressed in USD using the EURUSD spot rate, say 1.1145 so your 100 USD means you can short 100 / 1.1145 = 89.7 EUR

If you wanted to express the risk currency then you use the equivalent rate usually through the USD.

In this case you would be buying EUR with your USD to then short EURJPY. So if you're buying EUR (from the buy side) you use the offered rate.

## Answer by james42 (score 0)

https://quant.stackexchange.com/a/17734

The size of your bet should be expressed in dollars as well. Most brokers allow to trade lots of at least $1000 at time, independently of which pair you're trading. Anyway I think that you should read your broker guideline in order to understand better what's happening.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.