I’m not sure if this is the best place to put this, but I am a newbie so… anyway, i’ve only recently begun trading forex. I went with forex.com. I am happy with them for the most part, i mean, they have an alright trading platform, they have a mobile trading platform which i like (the fact that they have a mobile one, although i think it can be a lot better). But, the one thing i dont like is that when I have a trade open after 5pm, i get charged a rollover fee for that trade if it’s currently in a minus (although I don’t receive any rollover fee if my trade is positive!) - and since I am a swing trader (i think) - i do leave my trades open for a few days sometimes (once even over a month and paid over $100 in rollover fees!!). So, my question is, is there a good broker out there, with a mobile platform, and no rollover fees??
Don’t get fooled by rollover free. If the broker is not charging rollover, he is making it up with higher spreads or more slippage plus keeping the positive rollover which other brokers give clients. I guarantee no broker is eating the rollover on behalf of the client. Its just another marketing gimmick to attract clients by differentiating their service from others.
Thanks to everyone for your responses, and especially to CodeMeister for the words of wisdom.
Higher spreads might be a better option for some though. For example, one trade I had open for over a month, I paid over $100 in rollover fees. I’m only trading mini lots, so a slightly higher spread would have been a way better deal for me compared to the rollover fee. However perhaps over time the spreads might catchup. I guess it also depends on your trading strategy though, if you are a scalper you would probably choose rollover fees over higher spreads, and if you were a medium-long term trader you might want the opposite.
Also, with Forex.com, they were charging me for the negative rollover, but NOT giving me anything for positive rollovers!
Rollover (also called ‘Swap’) depends on the currency pair you’re trading, not on whether your trade is green (in profit) or red at swap time. Check out the School of Pipsology’s ‘Carry Trade’ section (on this website) for an explanation of how rollover works and how you can take advantage of it.
Many brokers will offer ‘No-swap Accounts’ upon request, if you commit to follow some rules regarding arbitrage.
Others have very low swap rates (mine charges 1 cent per day on a EURUSD mini lot (10,000 currency units), for instance, so keeping even a standard lot (100,000 currency units) open for a whole month would only cost approx. 3 bucks).
Slippage occurs at times of high market volatility; it means that if you have placed a stop-loss at 1.3000, for example, the market might move so rapidly that the stop-loss is only executed at 1.2997, thus costing you 3 pips more than originally planned.
Slippage can never be totally avoided, but it can be minimized by picking a broker with powerful servers and by having a fast internet connection yourself.
Some brokers ‘cheat’ with the slippage, fleecing their customers; not too long ago a major US broker has been heavily fined by the CFTC for his slippage practice.
1.) Refer to the top of this post, to determine how swap is calculated.
2.) Many brokers will charge swap no matter the currency pair or whether you’re long or short on a position; others will charge both ways on certain (mainly very liquid or popular) currency pairs and will either pay or charge swap interest on other pairs (like my broker does: charge both ways on EURUSD, pay/charge on AUDJPY).
3.) You said that you have paid over 100 bucks in swap with your broker; I guess that was with a demo account, using much larger position sizes than you would use with real money? You mentioned that you only trade mini lots … how many of them, 20? Surely you haven’t paid more than USD 100 in rollover fees for only one mini lot in a month?
Thanks a lot for your post! I will review rollovers once more, and thanks for explaining slippage.
About the charges I incurred, I was trading only 3 mini lots and was getting charges $4.5 per day! I can’t remember very clearly, but maybe I can go back and check, but I believe I was short on the position. I was getting charged on the days my position was negative. On the days it was positive, I never received any credit and I even asked them about this in their live chat and the rep confirmed this.
I disagree on this one as the no rollover fee aspect encourages more trades so more profit for the broker on spread, also rollover can be a fee or a pay depending on the trade, eg AUD / USD buy is money each rollover for the trader. With that being said rollover can be quite balanced so getting rid of it saves a lot of hassle for a trader and helps the broker at the same time… As an example Etoro uses no rollover and they have very tight spreads, 2 pips for the AUD / USD. And is the broker making money, of course… They make heaps on the spread by encouraging more trades…
If you long trade at all always choose no rollover fee, that is my take…
People often get confused on this one, rollover is to do with interest rates, eg, the AUD / USD is high interest so a buy gives you money at rollover whereas a sell takes money away… As an example having a lot of AUD / USD in a bullish market makes the trader more money by holding for weeks… In fact it is similar in a way to dividends but better…
And, no, it is not ‘similar to dividends’; it’s interest receivable or payable.
A dividend is a fixed-amount quarterly or annual profit participation, accountable as ROI; interest is accountable as cost, no matter whether you earn it or have to pay it (yes, there is such a thing as ‘negative cost’, which is not the same as income).
A decent broker’s swap fees are just cents, and can thus be ignored.
I pay about 10 cents rollover on a standard lot of EURUSD, which has a pip value of 10 bucks; so the swap is a hundredth of a pip. Negligible.
I just meant it is like dividends which it is when buying AUD… Except of course daily… Stocks make it quarterly or whatever however it is still the same similar a payment in a profitable trade daily…
The EUR / US are negligable as the interest rates of each currency is similar, so it depends on your currency preference…
Hey Oliver1968,
Can i ask what broker does these types of low fees? So i can check out as well… I am impressed by the low rollover for a $10 per pip trade daily… Does that mean you are making 10 cents if you are buying as well…? Or is your broker one of those one way fees…? Also give me a run down on spread if possible as well… on aud…
I’m running a ‘Razor Account’ with Pepperstone, an Australian broker.
[U]Swaps[/U]:
EURUSD: -0.01 pips (long), -0.01 pips (short) [This is not a mistake, negative interest is applied both ways.]
AUDUSD: 0.72 pips (long), -1.56 pips (short)
AUDJPY: 0.70 pips (long), -1.51 (short)
EURAUD: -2.00 pips (long), 0.96 pips (short)
[U]Spreads, [I]variable[/I] (for Standard Account / Razor Account)[/U]:
EURUSD: 0.5 to 1.8 pips / 0.1 to 0.6 pips (average in my experience 0.4 pips)
AUDUSD: 1.0 to 1.8 pips / 0.1 to 1.6 pips (average in my experience 0.7 pips)
AUDJPY: 1.0 to 2.2 pips / 0.1 to 1.8 pips (average in my experience 0.6 pips)
EURAUD: 1.0 to 3.0 pips / 0.1 to 1.8 pips (average in my experience 1.2 pips)
Note that for Razor Accounts a commission is applied in addition to the spread.
[U]Commissions for a standard lot (round turn)[/U]:
AUD 7.00
USD 7.53
EUR 5.23
GBP 4.59
Commissions change according to lot size, of course, i.e. commission on a mini lot is 10% of that on a standard lot, commission on a micro lot is 1% of that on a standard lot (mathematically rounded up or down where applicable).
Available Account Currencies are AUD, USD, EUR, GBP, JPY, CHF, NZD, SGD.
