why is the roll olf FXCM at a high i cant remember seeing on Dow Jones?
12% is kind of over the top dont you think so?
Please brief explanation.
Hi TURBONero,
For stock index CFDs like US30 and GER30, there is a daily finance charge if you are long. This is reflected in the negative number you see for RollB on stock index CFDs most days.
Technically, you can earn a finance charge if you are short a stock index CFD. However, the interest rates are so low these days for most major currencies that after you account for the haircut (the spread between the higher interest rate you pay versus the lower interest rate you earn), RollS for most stock index CFDs is zero most days.
So why was RollS a negative number (-1.07 Euros) and RollB a positive number (0.65 Euros) for US30 the other day? Furthermore, why is RollS again a negative number (-0.49 Euro) and RollB again a positive number (0.21 Euros) today?
The answer to both questions is dividends. When stocks that are part of an index pay dividends, then traders who are long the stock index CFD are entitled to earn those dividends. Conversely, traders who are short the stock index CFD are obligated to pay those dividends. If the total dividend payments for the stocks inside an index is greater than the finance charge on a particular day, then the net result is a positive RollB for the stock index CFD, and a negative RollS.
For more information about Finance Charges and Dividends, please read the CFD Product Guide, and if you have further questions about your FXCM account, you’re welcome to ask me in the Broker Aid Station.