DislikedNot sure I want to even try to convince anyone to use it. I shared it for free.Ignored
QuoteDislikedI also have a swap free account for the short so I make some on the interest too.
Long 1,000,000 EUR/USD @ 1.2967 = 1,296,700 USD
EUR interest rate = 3.50%
USD interest rate = 5.25%
3.50 – 5.25 = -1.75%
1,296,700* (-.0175) / 360 = -63.03 USD
The roll over of the trade will result in a charge of $63.03 or $6.30 for each lot.
This example is for a long trade, but if you were short, you'd receive that charge instead.OK, now let's see what happens with a long GBP/USD position and interest rates from http://www.bba.org.uk/content/1/c6/01/44/97/Sep08.xls
1,000,000 GBP/USD @ 1.7800 = 1,780,000 USD
GBP interest rate = 5.04%
USD interest rate = 2.14%
5.04% - 2.14% = +2.9% (note: this is positive)
1,780,000 x 2.9% / 365 = 141.42 USD
Thus in a long position you would receive $141 per day, because US interest rates are higher than UK ones. However, in our case it is is a short position, so you'd pay that amount, rather than receive it. So I don't get how you make money. Unless, of course, you have a dumb FX broker who charges like they do for equity positions, with a variant of LIBOR-2.5%.
You use the phrase "swap-free", so do you mean using an Islamic-style account, where you pay a fixed commission, but don't pay/receive interest? I'm still confused, because then you don't receive anything on the short position either. Or do you mean that you then receive ordinary interest on the balance?