Overnight Swap cost

Quote from Quiet1:

krishiyer,

i think you mean short the future and short the USD pair - otherwise its a "texas hedge" :D

no its negative carry.

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Hi Quiet
Thanks for your reply & clarification that the exchange premium is far superior to Spot forex debit/credit interest.
Exchange traded vehicle premium (like JPY cash to JYM7 premium)
is cheaper than trying to gain over night interest from IB spot forex( as we loose 0.5% usual spread)
Finally have come to the conclusion in the following manner.
If I want to long yen , I buy yen futures.
If I feel Yen is too strong & bound to weaken,buy USD/JPY in spot forex.Any over night interest earned is bonus. But focus of the trade is trading profit.
I do find trading currency futures during USA hours is far easier than spot forex.
Just because IB offers smaller lots in spot forex , iam tempted to average in to a position instead of buying 100k minimum futures lot.
thanks
 
Sure thing, but those swap rates aren't IB. I quoted for reference what would be considered competitive retail forex rates, from Oanda. IB's rates per 100k lot are worse, because of their 1) tiers, 2) exclusion of the first ~$10K on the interest credit (not debit) side, 3) 0.25%-0.5% spread under benchmark on the credit side, and 4) 0.5%-1.5% spread over benchmark on the debit side, for a total 0.75%-2.0% negative spread (hit), depending on position size.

Current IB swap rates on 100K, in pips:

EUR/USD: long -1.32, short -0.27 (0.64 & 0.63 pip worse than Oanda's numbers above);

GBP/USD: long -1.03, short -0.93 (0.91 & 0.64 pip worse).

Still better than your -2 pips at InterbankFX.
 
However note that Oanda calculates interest continuously so positions not held overnight also incur costs if the spread is negative. (I guess if you're short yen, this may work to your advantage.)

Though bec Oanda is a deal desk model, that distinction is the more important one to consider -- whether you want a deal desk or an ECN. I didn't consider Oanda in my survey on this topic bec I knew I did not want a deal desk.
 
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