Hi all, I have a question regarding the swap free accounts, specifically those offered by Alma Forex.
Looking at 1 000 000 units (10lots at 100 leverage) USD/ZAR (i’m south african ;D)
If I were to long the position it would incur an estimated swap of -214.93USD
However Alma does charge a $5 fee per standard lot ($50), this still leaves a deficit of -164.93USD
How does alma cover this cost? And couldnt I just use another account from another broker that does incur swap, hedge the position and make a profit?
I’m not familiar with Alma Forex, but I’m going to assume they are what’s known as a “market maker”.
They don’t have to cover the cost because there is no cost on their end. No money is really being exchanged, your broker is just paying you if you win and keeping your money if you lose.
Islamic accounts like that usually end up costing the trader more in fees than the swap would have been in the first place. To find one that doesn’t is [I]very [/I]suspicious.
If this is legit you may have just found the proverbial holy grail, but I bet there’s a catch somewhere. My guess is that the catch can be found in this quote from Alma’s website…
Alma Forex is registered in the Republic of Seychelles on the basis of the International Business Companies Act, 1994 (Act 24 of 1994). The company registration number is 053400.
Alma Forex incorporated business activity complies with Seychelles legislation and conforms to its regulations and internationally accepted supervisory and regulatory standards. Investing in offshore helps to keep your private and business affairs away from public eyes and secure your assets against possible future claim in your home country.
I’ll translate… “My small county that no one has ever heard of doesn’t regulate forex brokers, so I opened one up! Since I’m in the middle of nowhere and there are no laws here saying I can’t steal your money I’m going to steal your money.”
My guess is that the catch will come when you try to withdraw your money from Alma Forex…
Yes, I agree with that. That’s the risk statement these brokers ought to have!
However, the question of whether such arbitrage could be possible even between big US brokers with just slight differences in their swap policies is of theoretical interest, though, I suspect, not something that’s feasible for retailers to take advantage of.
Ah, I can’t recall al the details at the moment, but the fellow who started FPA was a guy named Felix somethingorother… who turned out to be a Russian guy and was arrested by the FBI for fraud…
