I have open positions with tree different brokers Oanda, CMS Forex and FX Solution. I am long USD-CAD and short GBP-USD .Now why FX Solution is charging inters while the other two brokers are paying interest for the same positions? Is the FX Solution jive broker?
FX Solution charging.
- Thread starter jerry11901
- Start date
WHen you enter a position, you are buying one currency and selling another. So you are a debitor and a creditor.
From the Oanda help pages:
Buying ("going long") the currency pair implies buying the first, base currency and selling an equivalent amount of the second, quote currency (to pay for the base currency). It is not necessary to own the quote currency prior to selling, as it is sold short. A trader buys a currency pair if he/she believes the base currency will go up relative to the quote currency, or equivalently that the corresponding exchange rate will go up.
Read the items under the heading 'Currency Trading' here for more information about how spot forex works.
http://fxtrade.oanda.com/help/
While the choice of the base currency of your account is, oh, somewhat important to you, the account owner, it has no bearing on the amounts of interest credit you receive and interest debit you pay on any fx trade placed in the account. Only the interest, if any, on the account balance, is affected by that choice.
Getting back to the OP's question, overcharging on fx interest debits, underpaying on fx interest credits and underpaying interest on balance are probably a non-trivial profit center at many fx dealers. It's made possible because the process often lacks transparency, with the actual interest rates hard to find, hard to interpret (swap rates) or not posted at all. Did you ask FX Sol about this discrepancy and, if so, how did they reply?
Getting back to the OP's question, overcharging on fx interest debits, underpaying on fx interest credits and underpaying interest on balance are probably a non-trivial profit center at many fx dealers. It's made possible because the process often lacks transparency, with the actual interest rates hard to find, hard to interpret (swap rates) or not posted at all. Did you ask FX Sol about this discrepancy and, if so, how did they reply?
FX Sol has simply widened their spread on the swaprates to the point where on positions such as USD/CAD and GBP/USD where the yield differential between the currencies is not as big, you end up paying a little when you are long USD, and you pay even more when you are short USD.
It's a tradeoff because they allow you to earn even on 0.25% margin. FXCM offers the best swaprates I've seen for retail accounts, but they require 2% margin to earn rollover. Their 2% margin is an approximation though, since it's $2000 for any 100k position whether the base currency of the pair is GBP, USD or NZD.
It's a tradeoff because they allow you to earn even on 0.25% margin. FXCM offers the best swaprates I've seen for retail accounts, but they require 2% margin to earn rollover. Their 2% margin is an approximation though, since it's $2000 for any 100k position whether the base currency of the pair is GBP, USD or NZD.
WOW! WOW! On October 11 they charged me three times more then the day before, that stink yahhh⦠I am closing account with FXsolution. 
Nothing strange going on there. That's standard industry practice for "fx rollover" (feel free to look it up) on Wednesday evenings, around 5 pm ET. When your open position is rolled over from Wednesday to Thursday, its settlement date (+2 business days) changes from Friday to Monday, a 3-day roll. What you see is a fee 3 times the normal daily fee.
Thank you for explanation late Apex.