Im kind of new to trading, and im currently trading in a demo account. I was wondering how profitable it would be to use rollover rates to your advantage.
For example, I am currently using Oanda Demo Account. According to their calculator(You can search"oanda rollover calculator" on google, it doesn’t allow me to post a link because im new), I found out that USD/ZAR Gives some nice rates when you short it. With 100000 units, in 24 hours you get 16$.
Does it always pay the rollover at 5pm New York, or(I remember reading this somewhere but not sure where), Does Oanda calculate it minute by minute. Because if it does give it at 5pm, you could short USD/ZAR at 4:59, close it at 5:01, get the rollover, and not get affected by price changes. This would earn 496.48 in a month(744 hours), from 100000 units. This seems like a nice and steady return. Is there anything which would cause this not to happen?
Even if it doesn’t pay at 5pm, you could keep the position if you’re not in a big uptrend, and get rollover, and maybe lose a bit, or earn even more from shorting.
if I see it right, your want to trade 1 lot and hold it maybe for a month to recieve $496. I assuma your calculation is good and I use $500 revenue for a month to make the calculation easier. Also, if the USD would be the secondary currency, then $10 would be the pip value (I also use this to make the calculation easier, but this is not the right way to calculate in your case!). This means if the pair does not move to any direction you make $500. If it goes 50 pips against your position then you win $500 with rollover rate and lose $500 on the trade.
Now, on a highly volatile pair which most likely also has a higher margin requirement, you most likely need a very large account to make an appropriate risk measure and don´t risk most/all your account to make that extra $500. I personally like rollover rate, but exotic currencies are not easy to trade.
So basically even if your calculation is good, the risk associated seems to be too high to make it worth to go for the extra $500.
Dear sir,
I m a newbie and I don’t understand well about “swap” and how it will affect my trade’s P&L.
Can you help to illustrate more ? with examples ?