Can I open and hold the position end of day with high leverage and close the position start of next day to getting the swap profit , to avoid being in the market and trading the moves??
How the swap get calculated by brokers
Do I need to hold the position 24 h??
Tnx
Hello, Markaria
I’ll answer your questions based on the policies of FXCM, the largest U.S. broker.
[B]Check with your own broker to confirm all of the details of their roll-over policies,[/B] particularly the amounts debited or credited to your account for the pair(s) you are interested in, as each individual broker determines these amounts for his own clients.
All that being said, here is how it would work if you were trading with FXCM:
Yes. Using FXCM as an example: The forex trading day begins and ends at 5pm New York time each day. A trade opened prior to 5pm, and held until after 5pm, is considered to be held “overnight”, and is paid (or charged) a roll-over sum.
You can open a trade at 4:59pm, and close it at 5:01pm, and the roll-over will be applied to your account.
As mentioned above, it varies from broker to broker.
The source of the interest charge credited or debited to your account is the [I]difference between the cost of funds (prevailing interest rates)[/I] in the two countries represented by the pair you are trading. These prevailing interest rates are the same for all the banks in the interbank network. However, that does not compel those banks to offer the same interest rates to the brokers for whom they provide liquidity. And those brokers are not compelled to pass on to you the rates offered to them by the banks.
So, it’s common for retail brokers to offer you (the retail trader) [I]less positive roll-over[/I] (interest) than the banks offer, and to charge you [I]more negative roll-over[/I] than the banks charge.
For the exact answer to your question, consult your own broker.
No. See the answer above.
Other facts you should be aware of, regarding interest roll-over:
The credit (or debit, as the case may be) will generally be applied to your account soon (within minutes, not hours) of the roll-over time (5pm New York time in the case of FXCM and many other brokers).
For positions held over the weekend, interest continues to accrue. Since retail brokers are closed for (nominally) 2 days each weekend, the brokers utilize a catch-up day during the week, and that day (for all brokers) is Wednesday. On Wednesday of each week, interest which accrued, but was not credited or debited on Saturday or Sunday, is paid or charged [I]along with Wednesday’s roll-over[/I] at 5pm on Wednesday. Accordingly, Wednesday is referred to as triple-interest day. If your position (held over the weekend) is subject to a negative roll-over, you can avoid the 2-day weekend charge by closing your position prior to 5pm Wednesday.
With interest rates exceptionally low in many countries, roll-over amounts for many pairs are tiny, or zero. So, if you want to play games with the roll-over, make sure the interest you are trying to capture [I]more[/I] than pays for the spreads those games will cost you.
Great answer