How does the interest fee's work in a Margin account?

[davidmamal]

Hi,

1- Anybody knows the interest Rate for Oanda and IBFX for an Margin account?

2- How often is interest rates charged on margin accounts?

3- Does interest reduce the amount of margin month to month if the interest charges monthly?

3- How do I calculate interest on margin borrowing for short-term trades (ex: for 4 hours)?

4- Does the interest make short calls happen sooner?

5- Do you have any tips, advice or comment about interest on margin account? How does the interest fee’s work in a Margin account?

Thanks,

[rhodytrader]

It sounds like you may be confusing the way margin works in forex with the way it works in stocks. In the latter you actually borrow from the broker to trade on margin, and thus pay interest. In forex there’s none of that. Any interest you pay or receive is dependent on the carry for pair(s) you trade.

[Master_Tang]

Hi,

1- Anybody knows the interest Rate for Oanda and IBFX for an Margin account?

It varies pair to pair. Some pay you, you pay some.

2- How often is interest rates charged on margin accounts?

Daily.

3- Does interest reduce the amount of margin month to month if the interest charges monthly?

Yes. Interest will count against your usable margin

3- How do I calculate interest on margin borrowing for short-term trades (ex: for 4 hours)?

A four hour trade will usually have no interest fee attached.

The only variable would be if your broker’s close, and reopen happened within that 4 hour period.

4- Does the interest make short calls happen sooner?

Theoretically yes. But if you had a trade eating you up, the more likely culprit would be lot sizes to large.

5- Do you have any tips, advice or comment about interest on margin account? How does the interest fee’s work in a Margin account?

Thanks,

My advise is don’t worry about it. It would only matter if you had LARGE lot sizes that you planned to leave open for extended periods of time. Like weeks, or months.