Daily rollover interest credits/debits

[JTrader]

Hi

I'd like to compare overnight financing/rollover prices for spot forex.

Therefore I thought it would be good to see peoples recommendations of spot brokers offering good/fair/recommended rollover charges, and the bad/best avoided spot fx brokers based on rollover credits/debits charges policies.



In other words, which spot fx brokers screw you with rollover charges?

And which spot fx brokers are quite fair in comparison with their rollover charges?

Thanks a lot.

 

[Hoggums]

Hi

I'd like to compare overnight financing/rollover prices for spot forex.

Therefore I thought it would be good to see peoples recommendations of spot brokers offering good/fair/recommended rollover charges, and the bad/best avoided rollover credits/debits charges.

Thanks a lot.

Why not trade ccy futures? If you're holding for more than a week then the increased spread is more than offset by the savings/gains you make by holding a future. You don't end up paying the charges to the broker and you profit fully if you are on the side of the carry.

 

[JTrader]

Why not trade ccy futures? If you're holding for more than a week then the increased spread is more than offset by the savings/gains you make by holding a future. You don't end up paying the charges to the broker and you profit fully if you are on the side of the carry.

The actual list of FX futures pairs is fairly limited, and you also have to deal with contract expiries.

One option is to only trade in the direction that they pay you interest on for that currency pair :idea: .

 

[Rhody Trader]

Why not trade ccy futures? If you're holding for more than a week then the increased spread is more than offset by the savings/gains you make by holding a future. You don't end up paying the charges to the broker and you profit fully if you are on the side of the carry.

Keep in mind that the spread between the futures price and the spot rate takes into account the interest rate differential. As you hold the position that spread will narrow, which will either benefit or hurt you depending on whether your position has the carry in your favor or against you. That means it's effectively the same to hold a spot position and a futures contract for the same amount of time.

For example, let's assume that GBP/USD remains absolutely flat for a week - no change in the exchange rate at all. The value of a spot position would obviously not change, but a trader long the pair would earn the carry. A trader long the futures wouldn't earn the carry in the same way, but would see price appreciation in the futures contract to account for the interest rate spread.

 

[Hoggums]

Keep in mind that the spread between the futures price and the spot rate takes into account the interest rate differential. As you hold the position that spread will narrow, which will either benefit or hurt you depending on whether your position has the carry in your favor or against you. That means it's effectively the same to hold a spot position and a futures contract for the same amount of time.

For example, let's assume that GBP/USD remains absolutely flat for a week - no change in the exchange rate at all. The value of a spot position would obviously not change, but a trader long the pair would earn the carry. A trader long the futures wouldn't earn the carry in the same way, but would see price appreciation in the futures contract to account for the interest rate spread.

Yes, but if you're dealing with a SB they will take 2% of the money you earn and add 2% interest to the payment if you are the wrong side of a carry. With a future they cannot do that - so you are better off longer term with a future.

 

[JTrader]

http://fxtrading.com/interest_free.php

Some traders choose to forgoe interest entirely. If you choose to, you will neither earn or be charged interest. If you are interested in this option, please specify that you would like an interest free account to your account advisor as you\'re submitting the application.

Although FX Trading has negotiated this on our clients\'s behalf, the clearing firm reserves the right to reinstate your interest. However, all clients will be contacted prior to doing so.

If you have any questions with regard to our interest free accounts, Contact Us or speak to a representative via the online chat to the left.

A few brokers seem to mention this type of arraangement. Some mention a standard charge per lot as opposed to a client being debited/credited subject to an account charge.

Some also mention Shariah

I don't quite understand it yet......

 

[JTrader]

Oanda have a handy interest rates calculator, and they calculate interest by the second. This seems the fairest method, as then all clients are subject to interest, as opposed to the broker who only debits/credits clients who roll trades over into the next day.
http://www.oanda.com/products/fxmath/interest.shtml

Comparing Oanda and Alpari for example http://www.alpari-idc.com/en/swap-points.html, overall oanda's rates do seem slightly more beneficial over a 24+ hour period by an average of maybe 0.2 pips IMO, when you compare the debit/credit payments differences between long & short trades.

 

[JTrader]

However, it is quite hard to compare brokers rates, as they may all be fairly similar, but with slightly different numbers, and differences.
It is also difficult to assess the bottom line impact on P/L. You can't say - overall, interest debits or credits will deduct 2% from my P/L, as it really depends on how long a long or short trade was held and whether debit or credit interest was applicable at the time.......