I opened a small account with Easy Forex (before it became apparent they they have a reputation for dodgy practices) and have noticed that they have whipped out a renewal fee for friday 22:00 AND saturday 22:00 and no doubt I will have another for Sunday.
How can they charge a renewal fee when the market is closed from 22:00 friday (UK time)?
The renewal fee friday night should cover the renewal for the next trading day, which is from 22:00 sunday, so i should surely not be getting charged another fee for saturday and sunday when there is no trading?
I want to get this clear before I go kick some ass.
At any bank they charge interest on deposits & loans
24/7, 365 days of the year, so why should a broker be
any different.
But like differing banks, brokers too have their own TOS,
it is best to read them for your broker of choice.
Just as an example Oanda pay interest on your account, as
well as interest on open positions.
North Finance calculate their swap rate (carry, interest) for the
week-end on a Wednesday, so if you have open positions at
2200 hrs on a Wednesday you get charged 3X the carry.
Even as I type this it seems strange that all these brokers also
have a different name for interest, swap, carry, overnight interest.
All brokers have bid ask spread on their interest rates, called
borrowing & lending rates which results in a negative or positive
carry trade.
Brokers also tend to hide this infomation on their site, so a
full search needs to be done.
Broker always win for the swap. If you long high yield currency (eg AUD/USD), they will pay u 6% interest. And when you short AUD/USD, they will charge you 7.2% interest. Bank earns risk free return.
So some of my friends and colleagues refuse to short high yield currency. I think this is not right. If there is opportunity, just short it, but try to exit your position within 24 hours.
