This interest stuff

Okay, so I am wondering about this overnight interest. Say I trade 1 standard lot overnight, USD to AUD. That’s $100,000. I must pay 100,0001.0025^(1/365) (.25% interest), this is $.68. I receive 100,0001.045^(1/365) (4.5% interest), this is $12.06. I should make $11.38, just for having that held overnight? Correct?

Okay, now next question. I saw a suggestion that I find two brokers. One that deals with this interest, and another that simply ignores the interest. I should go from USD to AUD in the one that gives interest, and the opposite way for the one that ignores the interest. Say I get 1:100 leverage on each of these, I should $4153.70 in a year from $2000 of investment, but that many brokers do not allow this. Does anyone know ones that do? I’m not trying to get away with anything, I just want to know if it’s allowed somewhere.

Next, what time divides days? Am I able to open a trade right before this division and close right after and collect that interest?

As far as hedging your position just to collect interest, I’m not sure how viable this is. I know some brokers don’t honor the swap rates for certain customers (I think it has something to do with some religion not allowing for interest…seriously).

And as far as the time you need to hold your position, yes, I believe you can open and close the order right before/after the swap is calculated. You only need to hold the position for that brief time in the day.

I believe it’s the Islamic religion that doesn’t allow interest? So you could sign up on one broker that has a speciall allowance for Islam and sign up on another broker as a normal person…
hmmm…

Aren’t those types of accounts charged a little extra in commission? If so, it would probably wipe out any gains made off of the swap.

I’m sure 1600 millions think about themselves as being normal :slight_smile:

Even if so, I would stand to make $11.38 from the swap per lot per day (USD to AUD). Even if they have an added commission or a larger spread, after a certain number of days this must be offset, and then later should be providing substantial profits.

Does anyone know what I should be looking for if this were allowed, and a list where I might find brokers which have this non interest option available?

I’m apparently not allowed to post a link to the source where I found it, but if it’s important I’ll copy the text and paste it here. I gave the gist of the idea anyway.

Hi KRGlaco

I thought the brokers got wise to this years ago. Rob Booker talks about it in ‘Adventures of a Currency Trader’, not that I’m putting a lot of faith in that. It’s an interesting read when you’re starting out though.

As for the Islamic accounts, I believe they charge you an overnight fee per lot which is way more than the interest you could get.
I did notice one on the web though claiming they don’t charge additional fees or widen spreads. It does mention they reserve the right to charge you the fee though. From their website:

[B]No Riba Policy: [/B]
[I]Clients benefiting from the Tadawul FX No Riba policy may hold positions for an undetermined time at the original opening price until they are closed and no charges will occur. Tadawul FX may revoke the ‘No Riba’ policy in case of abuse with a 48 hour notice by email.[/I]

I’m guessing you may be able to get away with it once, but opening up a $1m trade for a few days would definately raise alarm bells with them. I’m guessing they would backdate the fee if they thought you were messing with them.

Cheers,
OnePip

Well, that’s what you get for thinking when you’re not used to it.

how would they know you had an account with a different broker? holding a short term position across two daily candles could be a normal part of a trading method.

True, but I think once the interest started to bite them they would take notice especially if there were no other trades going on in the account. You could run a few smaller trades with tight TP’s and SL’s just to get some activity going.

One other thing though, what about a margin call? I guess you could add extra funds from the profit in the other account to cover it. Surely they’ve had people try this on before though, but then again, maybe not? :rolleyes:

yeah I agree it sounds good in theory but you probably couldn’t get away with it for very long.

hello everyone. Want to ask traders may be smb have tried already forex informer96 ? if yes tell me about results. i also want to try but firstly want to learn more about it. for ex i know that Forex96 is the very first Informer in the world, that utilizes in its algorithms A and K indexes of Solar activity. The Informer uses EURUSD pair and H4 timeframe only. It indicates when you have to place BUY or SELL orders by showing red pointers (as shown below). If you put your order you have to activate Trailing Stop parameter. But still i’d like to know exact results) tell me if anybody have tried.

Yes Muslims are not allowed to accrue interest, nor pay it. IBFX has a no-swap account, which is the main reason I went with them. Although I don’t usually hold my positions for the fixed charge to be taken from my position.

Synergy