Does anyone know are there any well reputed brokerages who dont charge Interests on forex? Any help would be appreciated. Cheers
I get the impression that you are new to the world of forex trading. That is OK. So was I 10 years ago. So let's first clarify some things. When you are long a higher yielding currency and short a lower yielding currency, this is known as a positive carryover trade. Presently, if you were long USDJPY or USDCHF, then this would be a positive carryover trade since short term interest rates in the US are higher than short term interest rates in both JPY and CHF. In this case, your broker would either credit you with interest or adjust your cost basis. On the other hand, when you are long a lower yielding currency and short a higher yielding currency, then this is known as a negative carryover trade. Presently, if you were long EURUSD or GBPUSD, then this would be a negative carryover trade since short term interest rates in EUR and GBP are higher than in the US. In this case, your broker would either charge you interest or adjust your cost basis. I know that CMC markets and Gain Capital will just adjust your cost basis. Neither will charge or credit you with interest. By the way, welcome to the world of forex.
Okay thank u very much for the reply. I was wondering for that case, suppose if we LONG GBP/JPY and at the same time SHORT it as well with a different broker, would I be able to yeild the interest risk-free ? Thanks
I need to make a correction. Presently, if you were long EURUSD, then this would be a negative carryover trade since short term interest rates in EUR are lower than short term interest rates in the USD. If you were long GBPUSD, then this would be a positive carryover trade since short term interest rates in GBP are higher than short term interest rates in the USD.
If the interest rate for both brokers is the same for GBP/JPY, then whatever you earned with one broker would be canceled with whatever you lose with the other broker. If the interest rate for both brokers is different for GBP/JPY, then "yes" you could earn the interest risk-free. However, the difference is probably very small. I do know that the interest rate at CMC markets and Gain Capital are different for USDCHF, however the difference is only .4 pips as of yesterday.
Some market makers have Interest Free accounts for Arabic clients. Of course that means you don't earn interest either. FXCM is one that will allow you to open an interst free account but you have to ask for the form. Trader/God
Okay.. here is something whcih i found out on the website the other day the reason I started this thread cos I was confuse how is that possible. I would greatly appreciate it if u can give your opinion about it since u are much more expereinced. ''Get $500.00 to $600.00 per 100k lot per month just for holding the GBP/JPY and hedge it with a short position in the same pair intrest free with a second broker. I am using oanda.com to hold the long position. See the link below to see which broker you can use to go short interest free. Note that you can start this strategy with $200 if you use oanda.com to go long GBP/JPY and use MA to go short GPB/JPY. You would put $100 with oanda.com and $100 with MV (see link below). ''
Okay. Thats a god information! hedging money from a broker which is not charging intrst and the one which is charging , One with a short and other with a LONG makes it a risk free money isint?
So how do you keep your equity up in both accounts??? I thought of it awhile back too. Why not just buy the GBP/JPY when it's low like I do and hold on to it. Check out the chart. It's not too hard to determine
Make sure you have a lot of money in the account where you decide to short GBPJPY because if GBPJPY keeps on trending up and you don't have enough money, then you will get a margin call.