> About this guide: I'm Lawrence, the writer behind supa.is. Between February and May 2026 I've published 150+ articles on supa.is across crypto and brokerage tooling — including 30+ Interactive Brokers-specific guides (recent examples: IBKR Desktop vs TWS: Which Platform Should You Use?, Interactive Brokers Paper Trading: How to Set Up and Switch Between Live & Demo (2026), Interactive Brokers Bracket Order: How to Set Stop Loss and Take Profit on TWS (2026 Guide)). The most-repeated reader question across that IBKR archive is exactly "Why does my buying power look different from my settled cash after a currency conversion?", which is why I'm publishing this standardized guide instead of answering one-off.
> Disclosure: This article contains affiliate links. We may earn a commission at no extra cost to you if you sign up for Interactive Brokers through our links.
If you've ever transferred money from your bank to Interactive Brokers (IBKR) in one currency, converted it to another, and then noticed that your "Buying Power" doesn't match your "Settled Cash," you're not alone. This is one of the most common sources of confusion for new IBKR traders.
You deposit 10,000 USD. You convert it to EUR. You look at your account and see 9,100 EUR settled cash. But your buying power says you can only buy 8,500 EUR worth of stocks. Where did the rest go? Is IBKR charging you a hidden fee? Is there a bug in the system?
The short answer is no. The discrepancy is a combination of three things: the FX spread (the cost of the conversion), the margin requirement (how much cash IBKR locks up to protect itself against market moves), and the way IBKR calculates cross-currency buying power.
In this guide, we'll break down exactly how IBKR handles currency conversion, why settled cash and buying power are fundamentally different metrics, and how you can optimize your account to minimize the friction between the two.
Settled Cash vs. Buying Power: The Core Difference
Before we dive into currency conversion, we need to establish a baseline understanding of what "Settled Cash" and "Buying Power" actually mean in the IBKR ecosystem. They are not interchangeable.
Settled Cash is the actual, liquid money sitting in your account. It's the cash you can withdraw back to your bank account at any time (subject to withdrawal limits and processing times). If you have 10,000 USD settled cash, you have 10,000 USD that belongs to you, fully realized. Buying Power is the maximum amount of stock or other securities you can purchase *right now* using your current account balance and margin leverage. Buying power is a theoretical number. It represents your purchasing capacity, not your actual wealth.For example, if you have a margin account with 10,000 USD settled cash, and you want to buy US stocks (which typically require 50% initial margin), your buying power for US stocks will be 20,000 USD. You can buy 20,000 USD worth of stock, but only because IBKR is lending you the other 10,000 USD. Your settled cash remains 10,000 USD.
When you introduce a second currency into the mix, the math gets more complicated. IBKR doesn't just look at your settled cash; it looks at your *net liquidation value* across all currencies, applies risk factors, and then calculates your buying power in the target currency.
The FX Spread: The Invisible Cost of Conversion
When you use IBKR to convert USD to EUR, you are executing a spot FX trade. IBKR makes money on this trade via the spread. The spread is the difference between the bid price (what IBKR pays you) and the ask price (what IBKR charges you).
Let's look at a standard EUR/USD quote as of July 2026.
- The mid-market rate is 1.1000.
- IBKR's bid might be 1.0990.
- IBKR's ask might be 1.1010.
You lost 18.17 USD. That is the cost of the spread.
IBKR's FX spreads are generally among the best in the industry (often 0.05% to 0.10% depending on the currency pair and your account size), but they are not zero. If you are doing large conversions, this spread is a real cost.
> Pro Tip: If you want to minimize FX spread costs, consider using IBKR's "FX" tab to place a limit order instead of a market order. If you set a limit order at the mid-market rate, you might get filled if the market moves in your favor, saving you the spread. However, if the market is volatile, your limit order might not fill, and you'll miss your trade.
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Sign up on Interactive Brokers →Cross-Currency Margin: Why Your Buying Power Shrinks
This is the biggest factor causing the discrepancy between settled cash and buying power after a currency conversion.
When you hold cash in USD and want to buy US stocks, IBKR applies a standard margin requirement (e.g., 50% for US stocks, as detailed in the IBKR Margin Requirements documentation). But when you hold cash in USD and want to buy European stocks (denominated in EUR), IBKR applies a cross-currency margin requirement.
Why? Because IBKR is taking on additional risk. If the EUR crashes against the USD while you are holding a long position in European stocks, IBKR's collateral (your USD cash) is worth less relative to your position. To protect itself, IBKR requires a higher margin buffer.
Let's look at a hypothetical example to illustrate this:
1. You have 10,000 USD settled cash. 2. You convert it to EUR at a rate of 0.91. You now have 9,100 EUR settled cash. 3. You want to buy a European stock that costs 9,100 EUR. 4. If you were buying a US stock with 10,000 USD, your buying power would be 20,000 USD (50% margin). 5. But because you are buying a European stock with EUR cash, IBKR might apply a 70% initial margin requirement instead of 50% (a hypothetical scenario for illustration). Your buying power for that European stock is now only 13,000 EUR (9,100 / 0.70).Even if you don't convert the cash and keep it in USD, if you try to buy a European stock directly using your USD buying power, IBKR will still apply a cross-currency margin haircut. Your 10,000 USD might only give you 12,000 EUR worth of buying power for European stocks, rather than the theoretical 20,000 EUR.
This is why your buying power *always* looks lower than your settled cash after a currency conversion. It's not a bug; it's a risk management feature.
The "Currency Conversion" Feature vs. Manual FX Trading
IBKR offers two ways to convert currencies:
1. The "Currency Conversion" feature: A simple, one-click interface in the IBKR Mobile app or IBKR Desktop that lets you convert cash between currencies instantly. 2. Manual FX trading: Placing a market or limit order on the FX market (e.g., selling USD/EUR).The "Currency Conversion" feature is convenient, but it often has a slightly wider spread than manual FX trading. If you are moving large amounts of money, it's worth checking the manual FX market to see if you can get a better rate.
However, the manual FX market can be confusing for beginners. You have to understand how to read the bid/ask prices, and you have to be careful about which currency is the base currency and which is the quote currency. For most retail traders, the convenience of the "Currency Conversion" feature is worth the slight spread difference.
How to Optimize Your IBKR Currency Conversion
If you are an international investor using IBKR, you will inevitably deal with currency conversion. Here are some strategies to minimize the friction between your settled cash and your buying power:
1. Convert Only What You Need
If you are investing in both US and European stocks, don't convert all your cash to one currency. Keep a portion in USD for US stocks, and a portion in EUR for European stocks. This minimizes your exposure to FX spreads and cross-currency margin haircuts.2. Use Limit Orders for FX
If you are converting a large amount of cash, use limit orders on the FX market rather than the instant "Currency Conversion" feature. Set your limit order at the mid-market rate and wait for it to fill. You might not get filled immediately, but you will save on the spread.3. Understand Your Margin Requirements
Before you convert cash, check the margin requirements for the stocks you want to buy. You can find this information in IBKR's Margin Requirements page. If the margin requirement is high (e.g., 70% or 80%), you will need more settled cash to achieve the same buying power.4. Consider a Multi-Currency Account
If you are investing in multiple currencies, consider opening a multi-currency account with IBKR. This allows you to hold cash in multiple currencies without having to convert it back and forth. You can then use the appropriate currency to buy stocks in that market, minimizing FX costs.5. Watch Out for Overnight FX Rates
If you convert cash during the day, but the market closes before the trade settles, your cash will be converted at the closing rate. If the market is volatile, this rate might be worse than the rate you saw when you placed the order. Be aware of this risk.Common Pitfalls with IBKR Currency Conversion
Pitfall 1: Assuming Buying Power Equals Cash
This is the most common mistake. New traders see a buying power of 20,000 EUR and think they have 20,000 EUR to invest. They don't realize that half of that is borrowed money. If the market moves against them, they will get a margin call. Always focus on your settled cash, not your buying power.Pitfall 2: Ignoring the FX Spread
If you are converting small amounts of cash frequently, the FX spread can eat into your returns. For example, if you convert 100 USD to EUR and back to USD every day, you will lose about 0.1% per cycle. Over a year, that's a 36.5% loss purely to FX spreads. Only convert cash when you need it.Pitfall 3: Not Understanding Cross-Currency Margin
If you are buying international stocks, you need to understand that your buying power will be lower than if you were buying domestic stocks. This is not a bug; it's a feature. If you need more buying power, you need more settled cash.Pitfall 4: Converting at the Wrong Time
FX markets are open 24/5, but they are most liquid during the overlap of the US and European trading sessions (8:00 AM to 12:00 PM ET). If you convert cash outside of these hours, you might get a worse rate due to lower liquidity.FAQ
Why is my buying power lower than my settled cash after converting currencies?
Your buying power is lower because IBKR applies a cross-currency margin requirement. When you hold cash in one currency and want to buy stocks in another, IBKR requires a larger cash buffer to protect against FX risk. Additionally, the FX spread reduces the amount of cash you receive during the conversion.Is the FX spread charged as a separate fee?
No. The FX spread is built into the exchange rate. You don't see a separate line item for it on your statement. It is the difference between the bid and ask prices on the FX market.Can I avoid the FX spread entirely?
No. All brokers charge a spread on FX trades. However, you can minimize it by using limit orders instead of market orders, and by converting cash during peak trading hours when liquidity is highest.Does IBKR charge a fee for currency conversion?
No, IBKR does not charge a separate commission for currency conversion. They make money on the spread. However, if you are using the IBKR Mobile app, there might be a small convenience fee for instant conversions, depending on your account type.How can I check the margin requirements for international stocks?
You can check the margin requirements for international stocks on IBKR's Margin Requirements page. You can also check the margin requirements for a specific stock by looking at the "Margin" tab in the IBKR Desktop or TWS platform.Risk Warning
> Risk Warning: Trading on margin involves substantial risk of loss. Never invest more than you can afford to lose. This is not financial advice.
Conclusion
The discrepancy between settled cash and buying power after a currency conversion on IBKR is not a bug; it's a feature. It's the result of FX spreads and cross-currency margin requirements. By understanding how these mechanisms work, you can optimize your IBKR account to minimize costs and maximize your buying power.
If you are looking to get started with IBKR, you can sign up through our link below.
Sign up on Interactive Brokers