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Question about carry interest
- Thread starter gkishot
- Start date
They should be similar because they are based on the same fundamentals, it depends on how generous your broker wants to be.
Just a summary of how interest works in the market for the newbies. Every currency has an interest rate associated with it. So when you hear about Greenspan raising rates, that is the rate associated with the USD. The size and direction of the interest rate differential determine whether you are making or earning interest on the trades. Right now on the Euro the USD is the higher yielding pair, so if you are long the USD you should earn the interest (some brokers never let you earn the interest, avoid them, others will have restriction on the leverage on your account that will allow you to earn). This is usually a transfer payment between traders, so if you are earning the roll another trader in the market is paying.
During Rollover the interest is accessed on the account, Wednesdays is triple rollover. And if you are really slick and catch the Holiday rolls you can earn 4,5,6 rollover periods all at once, it happens a few times a year that the rolls are more than the transaction costs. Easy money.
A reputable broker will tell you what the interest is going to be. If that information is hidden before it occurs watch out, it means you are getting the short end of the stick.
Trader/God
Just a summary of how interest works in the market for the newbies. Every currency has an interest rate associated with it. So when you hear about Greenspan raising rates, that is the rate associated with the USD. The size and direction of the interest rate differential determine whether you are making or earning interest on the trades. Right now on the Euro the USD is the higher yielding pair, so if you are long the USD you should earn the interest (some brokers never let you earn the interest, avoid them, others will have restriction on the leverage on your account that will allow you to earn). This is usually a transfer payment between traders, so if you are earning the roll another trader in the market is paying.
During Rollover the interest is accessed on the account, Wednesdays is triple rollover. And if you are really slick and catch the Holiday rolls you can earn 4,5,6 rollover periods all at once, it happens a few times a year that the rolls are more than the transaction costs. Easy money.
A reputable broker will tell you what the interest is going to be. If that information is hidden before it occurs watch out, it means you are getting the short end of the stick.
Trader/God
Quote from Trader/God:
They should be similar because they are based on the same fundamentals, it depends on how generous your broker wants to be.
Just a summary of how interest works in the market for the newbies. Every currency has an interest rate associated with it. So when you hear about Greenspan raising rates, that is the rate associated with the USD. The size and direction of the interest rate differential determine whether you are making or earning interest on the trades. Right now on the Euro the USD is the higher yielding pair, so if you are long the USD you should earn the interest (some brokers never let you earn the interest, avoid them, others will have restriction on the leverage on your account that will allow you to earn). This is usually a transfer payment between traders, so if you are earning the roll another trader in the market is paying.
During Rollover the interest is accessed on the account, Wednesdays is triple rollover. And if you are really slick and catch the Holiday rolls you can earn 4,5,6 rollover periods all at once, it happens a few times a year that the rolls are more than the transaction costs. Easy money.
A reputable broker will tell you what the interest is going to be. If that information is hidden before it occurs watch out, it means you are getting the short end of the stick.
Trader/God
Thank you trader god. What it basically tells me is that carry interest is dependent on the broker and does not have to be exactly the same, right?
Trader god, I have one more question. Because I am a carry interest trader so I would like to know whether positive interest pairs like USD/CHF, USD/JPY, AUD/JPY pairs etc were negative interest some time in the past. Where I can look up for their historical carry interest data on the web. Basically I would like to know what are the chances for positive interest pair to turn negative. Thanks.