Why FX gains and losses matter
Overseas stocks trade in foreign currency, so your home-currency return is the stock return combined with the exchange-rate move. A 10% gain in dollars with a 10% fall in the exchange rate nets about −1% in won. If the rate rises, your gain grows.
Formulas
- Home-currency return = (1 + USD return) × (1 + FX change) − 1
- USD return = proceeds ÷ cost (fees included)
- FX change = rate at sale ÷ rate at purchase − 1
How to use it
- Enter quantity and buy/sell prices in dollars.
- Enter the KRW/USD rate at purchase and at sale (the rate applied in your broker's fills).
- Fees are per side and applied to both the buy and the sell.
Caveats
Broker-specific rates, conversion fees and taxes are not included. Tax can be checked separately in the overseas stock tax calculator.
FAQ
Is a falling exchange rate a loss?
A dollar gain is reduced by the currency fall; combined, the result can be negative.
Which rate should I enter?
The rate shown in your broker's fill report is most accurate; otherwise use that day's reference rate.
What about conversion fees?
Add them into the fee field or include them in the per-side rate.
Other currencies?
Yes — the arithmetic is the same for any currency pair.