Good suggestion! Any small trader with less than 500K should move to another brokers because IB doesn't want you. "we want traders of the semi-pro and pro variety, not hobbyist investors." I now know I am not the only one being charged INSANE interest at IB. And that's because they deliberately want to discourage me. I am discouraged.
Yes, the actual interest rate may even be lower than Tradestation if your account size is small. You are being charged insane interest in this regard. However if you have a very big account, the loss of $10,000 will be spread accross the whole sum, the interest rate is okay. But I agree the advertised interest rate may give people false impression.
Has anything changed in interest calculation? I am going to start trade my ib account and this calculations giving me a headache
Does anyone have a breakdown on what IB pays/charges during rollover for the following pairs per standard lot? USD/CHF GBP/JPY If you could give the rate for going long and short on each pair it would be helpful. I'm trying to compare them with Dukscopy and HotspotFX in regards to the fairness of their rollover/swap policy. Anyone have any information on this? Edit: Just give the date of the quote if you wouldn't mind as well. Thanks.
not only IB doesn't want you. We don't want armature IB whiners either. If you are going to whine about IB, be a pro, whine like a crybaby.
This question cannot be answered without additionally specifying both the size and price of each position. http://www.interactivebrokers.com/en/accounts/fees/interest.php Pick your size and price, convert the base currency into the counter / quote currency, then look up the long and short side in the tables called "Interest Earned Rates" and "Interest Expense Rates", respectively. For example: 1) long 200,000 GBP/JPY @238.00. 2a) long GBP 200,000 --> [0% x 5,500 + 4.853% x (55,000 - 5,500) + 5.103% x (200,000 - 55,000)] / 200,000 = +4.90% APR ~= GBP 26.85 daily ~= USD 52.89 daily @1.97. 2b) short JPY 238 x 200,000 = JPY 47,600,000 --> - [1.966% x 11,905,000 + 1.466% x (47,600,000 - 11,905,000)] / 47,600,000 = -1.10% APR ~= - JPY 1,435 daily ~= - USD 11.86 daily @121.00. 3) net = +3.80% APR ~= USD 41.03 daily, at current exchange and interest rates. Because of those tiers, you'll get more than 3.80% for larger amounts, less for smaller amounts. Also, don't forget to take into account any tiered interest paid on the account balance itself, as shown in the top line of the "Interest Earned Rates" table. By comparison, say, Oanda pays 5.1% - 0.47% = +4.63% APR, for any amount of long GBP/JPY, at current rates (= USD 50.01 daily for 200,000, as above), as well as +4.825% APR on the entire account balance: http://www.oanda.com/products/fxmath/interest.shtml I'll let you work out the other 3 cases and/or different sizes. If this sort of thing is important to the way you trade, put the calculations in Excel, a simple task. Have fun.
What happens in the flip side of that question? Say you want to earn the IRD with the least amount of exposure. Could you enter AUD.JPY at 16:55 EST and exit at 17:15 EST and lock-in one day's worth of settlement/interest? I realize that paying the spread and commission would eat away at most of the interest, but I'm just curious if that example is possible.
Yes to both. 17:00 is the break for settlement day determination so whatever position one has at 17:00 will be the settled position 2 business days later. One has to be a little careful to understand settlement date counting (see the holiday calendar on the web site under the Help menu point, http://www.interactivebrokers.com/en/general/currencyHoliday.php) since a USD/GBP trade and a EUR/GBP trade may settle on different dates in case of a US or EUR holiday. One thing everyone should realize is that the pricing of the pairs already take the settlement cycle and interest rate differentials into account. The banks who represent most of the liquidity in forex spot fully understand interest issues. This is what they understand and control better than most other market participants so there probably isn't 'free' money in this space and if it looks to good to be true, it probably is.