Spread and Interest rate differentials

Trading Discussion
1

Sup guys?
are interest rates spreads? how do I find interest rates of individual currencies in a currency pair?

2

Spreads are not interest rates. Spreads are the difference between the price you get when buying or selling a pair.

There are websites that list national interest rates for different countries, but your broker probably won’t give you all of this. The interest rate for my broker on MT5 is shown if I right click on the currency pair in market watch, click on specification and then swap long and swap short are the numbers you’re looking for. A positive number and you make money, a negative and you lose money.

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3

Interest rates and spreads are two different things. You can get both of your questions answered if you read through the School of Pipsology.

4

yes I know, but on a trading platform how do you find the interest rate on a currency pair or do you just look it up on google? and how do carry trade work on a trading platform? I understand how its being used to trade and make profit, but I am having difficulty applying it to my trading platform, I tried asking customer support they seem not to know what carry trade is or what I am talking about. I am currently a collage junior in the schools of pips and I need to know how its applied on a trading platform.

5

Thanks, what broker is that?? I tried looking for carry trade opportunity on FXPRO MT4 and iqoption, I couldn’t find it and customer support seem not to know what I am talking about. Carry trade is simply just opening a buy or sell position over night and waiting to be credited with the interest rate differentials the next day right?

6

I use ICMarkets on MT5.

You can’t just look it up on the internet, because brokers don’t give you the full rate. If two currencies have similar interest rates, the pair can have short and long negative swap rates.

I wouldn’t advise just taking a trade to get the interest rate though, the currency only has to move a small amount in the opposite direction for you to lose a lot more money than the interest rate. Better to see it as a bonus rather than an incentive to make a trade. Even with big interest rate differences like GBPTRY, you can end up losing a lot of money by doing this. Trust me, I made this mistake :frowning:

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7

Alright, thanks for the advice man!