SB vs. Dedicated FX - The interest charge dilemma

[dberliner]

I'm currently trading with Capital Spreads, but I'm thinking of migrating to a dedicated FX broker. Reasoning is the spreads usually reflect the true interbank market better (I've seen too many instances when large fast spikes looked a whole lot different between the spreadbetter and the FX broker).

My question is this: Where would I be treated better regarding overnight interest charges? (That is - pay less). Are the general rules between these two entities differ in how they handle this?

I am looking to hear from people with personal experience. Haven't actually used a dedicated FX broker before.

Thank you very much,

Dana Berliner

 

[dberliner]

I haven't received any answers and it may be due to the fact my question was too general and simplistic.

Basically I am trying to assess whether the Capital Spreads overnight rollover RFR +/- 2% method is less favorable than the rollover method used by direct Access Forex brokers. As far as I understand (although, apparently, am not sure) most seem to just straightforwardly debit or credit you based on being long or short the higher interest rate bearing currency without any additions to that formula.

With my SB company though , here's how it goes: I held short a USD/JPY position that is equivalent to one mini lot (10,000 JPY). The pair closed Friday at 94.60. Interest rate with CS was : -0.15% (the interest rate differential between the USD and the JPY ) minus another 2%. all in all it ended up being : (-2.15% * 9460)/365 = 1.67 debited for a 3 day weekend.

Say I would actually be long. no credit here either. The calc would go like this : -0.15% plus 2% = 1.85%

(9640*1.85%) /365 is 1.46 (0.488 a day debited for 3 days)

I never seem to enjoy receiving credit on the higher interest rate currency when long it or be debited less on the lower interest rate currency when shorting it.

 

[SvenFoster]

Most fx brokers will adjust sometime in the evening
some will adjust the entry price but most will apply a +/- adjustment to your account.

one(that I know of), calculates interest on a second by second basis and also pays on deposits.
obviously a lot of people wont like that idea however, if your a longer term trader trading inline with the interest +ve side you will gain.. and with pairs like TRY/USD or TRY/JPY the differential is +5% a year, 10:1 leverage you do the maths. (weekends included.)
http://fxtrade.oanda.com/tools/fxcalculators/interest_calculator

I personally dont trade for interest only but on some pairs it can make sense to take one side. %interest cannot beat trading profitably but it can add to it.