Dollar charts versus a won account
US stock charts are almost always drawn in dollar prices. For someone investing in won from Korea, however, the account value is that dollar price multiplied by the won-dollar exchange rate. That is why the won value can rise or fall while the dollar chart stays flat. Chart analysis is usually done in dollars, but to judge your own performance you need the exchange-rate chart as well, to see what actually moved the value. The calculation itself is covered in detail in a separate article on exchange rates and overseas stock returns, so this one focuses on reading the charts side by side.
How to overlay the two charts
The simplest approach is to stack a stock chart and a won-dollar chart for the same period. Their price units differ, so overlaying them directly is hard to read; switching to percentage-change charts that start from the same point makes comparison easy. If you add a line that converts the stock's dollar price into won using each day's exchange rate, the distance between the dollar line and the won line is exactly what the exchange rate contributed. Look for stretches where that gap widens or narrows and the source of the return becomes visible.
- Use the same period and the same starting point
- Show percentage change instead of price
- Draw the dollar line and the won-converted line together
- Find the stretches where the two lines move apart
The day boundaries are different
The US regular session opens during the Korean night. On a daily chart, a US stock's day follows US Eastern time, while a won-dollar chart's day may follow the Seoul FX market or the global market depending on the data provider. Bars with the same date can therefore cover different hours. To convert to won accurately day by day you have to decide which moment's rate to use, and the shorter the period, the more this mismatch leaks into the result. The rate a brokerage actually applies has its own timing and method, so check its official guidance.
When stocks and the exchange rate move together
In periods of market stress, demand for dollars often rises and the won-dollar rate climbs while US stocks fall. In such periods the drop in won terms can look smaller than the drop on the dollar chart. Conversely, if the rate falls while stocks rise, the gain feels smaller in won. But this opposite movement can weaken or even flip depending on the period, so it is risky to expect the exchange rate to always act as a cushion. It is better to overlay the two charts and check the relationship for that period yourself.
Gauging the dollar's own strength
The won-dollar rate mixes conditions on the won side with conditions on the dollar side. To tell whether the dollar strengthened against major currencies or only the won weakened, look at a dollar index that measures the dollar against several major currencies. If the dollar index did not rise but the won-dollar rate did, conditions on the won side probably mattered more. Keep in mind that the dollar index is heavily weighted toward a few currencies such as the euro, so it is not directly tied to the won.
Care when comparing with Korean stocks
When comparing a chart of a large Korean stock such as Samsung Electronics or SK Hynix with one of a large US tech stock, it is easy to forget that one is in won and the other in dollars. A fair comparison requires the same currency. Many large Korean exporters also see exchange-rate swings show up in their earnings, so the rate affects not only the won value of holdings but the company's numbers themselves. The same applies to indexes: avoid mixing a dollar-based index with a won-based one.
Checking with this site's live tools
The currency converter instantly calculates won amounts at the current rate, and the global markets and FX overview shows US indexes and the won-dollar rate together on one screen. Placing a US stock next to a Korean one in the stock comparison tool lets you practice comparing their trends while keeping the currency difference in mind. Tool values are based on data providers' quotes and may differ from the rate applied to an actual trade.
Summary and caution
Even if you analyze US stock charts in dollars, investing in won makes it worth reading the exchange-rate chart alongside them to understand your results correctly. The key points are percentage charts from a common start, mismatched day boundaries, separating the dollar index from the won-dollar rate, and comparing in a single currency. Predicting exchange rates to time trades is as hard as predicting stock prices. This article does not recommend exchanging currency or trading at any particular time and is not investment advice.
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