I am working on an excel spreadsheet to help me with my trades. I am using a hedge strategy, so calculating daily interest is something I would like to know.
Also, I see GBP rate is 5.5% and USD is 5.25% … yet on my first day using this pair, my demo account said I lost money on my “buy” but how? I should be 0.25% in the black!!! Do brokers offer different rates?
If you goto your brokers web page they should provide this information to you if not then find a new one you dont want to deal with them. And yes different brokers do offer different rates, or you might say they figure them out differently. Some do not even pay or charge intrest. The best way to get your answer is to call them up and ask them. It is good to call them with a demo account because you can get a feel of how they will treat you when you go live.
Also check out this web site metaf.net
Technically, roll-over and interest are not the same.
Roll-over comes from the fact that in true spot forex trading there it is like trading a 2-day futures contract. You’re supposed to deliver the currency, which is what goes on in in the interbank market. Of course we don’t actually do that, so what your broker is going is effectively closing your position (thus avoiding the need for delivery) and opening a new one. In the process you lose the spread.
Carry interest comes from the fact that when doing a forex trade you are technically borrowing the short currency converting it to the long one and depositing those funds. Thus you pay interest on the borrowed funds and earn it on the deposited ones.
In practice I think you will find mostly that brokers either do roll-over or carry, but usually not both.