So I’m trading on GFT’s web platform (where rollover rates are not published) and I left a long eur/usd position open overnight. The next day I see my account was hit (negatively) with a charge for roll financing. Now, am I losing my mind, or aren’t euro rates higher than usd rates? Shouldn’t this be a positive interest rate spread (in my favor)?
Thanks!
yes it is - but are you spreadbetting?
Make sure to factor in the spread in the carry interest. Euro and dollar rates are pretty tight these days so you may be seeing negative carry because your paying the offer dollar rate and receiving the bid euro rate.
GFT probably have a fixed + or - 2 % fee over and above the interest rate differentials. If you want to hold positions for longer (eg months), you may want to look into futures or quarterly contracts or find a trustworthy broker who doesn’t charge a swap or rollover charge (which is what I am trying to do at the moment, so any recommendations here would be welcome). If you are of muslim religion, some brokers offer an Islamic account where there is no rollover charges but I’m sure they will just increase the spread to cater for this.