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US forex broker for mid-long term positions? IB interest is killing me
- Thread starter jjj
- Start date
Wait - I don't trade Forex, but brokers don't charge interest on the notional value do they?
I know that Ninjatrader just started offering Forex - I couldn't find their rates but it may be worth an email to check. http://www.ninjatrader.com/Brokerage.php
I know that Ninjatrader just started offering Forex - I couldn't find their rates but it may be worth an email to check. http://www.ninjatrader.com/Brokerage.php
Of course they do (for positions held post NY close). FX is equivalent buying cash in one currency with the proceeds of a "short-sale" in another currency at the spot price. So you earn the interest on the long side and pay it on the short side.
Spot forex and CFDs are broker-heaven as naive traders don't really see the financing cost they are paying on the short side/cut they are taking on the long side. If a broker does not refer to the financing rates in their marketing/information this should tell you something about them. Google "FX Rollover".
Note as well that each currency has it's own "local" (T+x) settlement rules for payments so an opening FX trade (held post NY close) will expose you to the interest rates for several days. In particular, holding something over Wednesday close can mean you pay/receive the interest for at least an extra day.
IB helpfully reminds traders of the relevant holidays for each currency and warns that traders should understand when their trades will settle.
Spot forex and CFDs are broker-heaven as naive traders don't really see the financing cost they are paying on the short side/cut they are taking on the long side. If a broker does not refer to the financing rates in their marketing/information this should tell you something about them. Google "FX Rollover".
Note as well that each currency has it's own "local" (T+x) settlement rules for payments so an opening FX trade (held post NY close) will expose you to the interest rates for several days. In particular, holding something over Wednesday close can mean you pay/receive the interest for at least an extra day.
IB helpfully reminds traders of the relevant holidays for each currency and warns that traders should understand when their trades will settle.
I'm a very small trader. I have traded futures and spot. I really like spot, especially when you need to spread some risk around when you are not reading well.Yes, I'll stick to trading futures. Interest on the notional is crazy.
for instance, the most active pair traded both futures and spot is eur/usd
but that is two bets, one on the eur and the other on the USD
what if I am bearish on both?
ut that is two bets, one on the eur and the other on the USD
what if I am bearish on both?
Find an uncorrelated currency and short both against that uncorrelated currency. For example, assume the HKD is not highly correlated to both the EUR & USD. You could short both USD and EUR against HKD. Just an idea.
or you can just trade the majors which are highly liquid almost 24/5 against each otherFind an uncorrelated currency and short both against that uncorrelated currency. For example, assume the HKD is not highly correlated to both the EUR & USD. You could short both USD and EUR against HKD. Just an idea.
how is that a "benefit"? It's the same price. Either pay me now or pay me later.So the benefit of the future v spot fx is that the financing cost is "built-in" to the price without the broker cut.
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