I would ask them for a copy of the swap spreads they use for each pair when doing their rollover. This is the only way you can tell whether the company is taking advantage of you. If they won't show that to you I would take my business elsewhere. FYI 3 days GBP should be about 0.1 of a pip, not 10 pips!
I never got a satisfactory answer and at this point, I do not care, it was a small enough so that damage is not that great. I learned my lesson and I WILL NEVER take ANOTHER OVERNIGHT TRADE until they start dealing in reality with their interest charges. End of story....
I am having a problem understanding the interest calcs. too. I hope IB will join this thread and explain it clearly and simply.
GWAC, Just as a point of clarification, when you refer to overnight trades, are you talking only about entering a trade on a given day and holding it past the 5pm est cut off or are you also seeing the same interest issues with a trade that would be executed at (for example) 10pm est and closed at 5am est (7hrs later)? Thanks
IB interest charges are incredibly confusing- for equities also. I can't imagine charging clients an extra day here or there worth losing business. My commission costs far outweight the interest that I pay. a day or two of interest doesn't make a whole lot of difference to me, but the lack of transparency is a little unsettling.
I am taking about holding any trades past 5pm est. You cannot compare equities to fx, Fx the amts are usually higher than equities due to margin. There are times when you should earn on a carry trades (the currency you are long has a higher interest rate than the one you are short) but because of their interest rates that they charge or credit are not anywhere near mkt you get screwed. The worst part of the whole thing is that they cover themselves by doing FX swaps, not this stupid interest rate crap. They should cover everyones accounts by doing swaps at proper swap points.... This is very profitable for them.
disguistingly profitable... And even more disguisting is that they don't have the decency to comment on the issue. Deliberately not mentioned at their web-pages. Those are the hidden costs of forex! I am alerting any Forex trader to check how bad and ugly his interest "haircut" is. So far, the fairest deal seems to be Oanda.
Interest is calculated daily and accrued. We post the amount to the statements when the accrual hits 50 usd. This is a (hopepfully) temporary limitation caused by the time it takes to post interest in 8 currencies to thousands of accounts which slows down statement delivery. When we get that solved, we will post daily accrual entries. An enhanced monthly summary with daily data is also in the pipeline. Our calculation method is explained in great, even excruciating, detail on our website. http://www.interactivebrokers.com/en/accounts/fees/interestMethods.php?ib_entity=llc The method conforms to industry standards for day counting and holiday treatment and our spreads are better than the brokers I know of. If someone offers better for large accounts (>250K), please PM me and I will see if we are misunderstanding the inducsty. It is our goal to make our interest model fully transparent and competitive. The end of the forex clearing day is 1700 EST. Cash balances for interest are determined after that. Please note however that we calculate interest on settled balances, not trade date balances so trades done on monday settle on wednesday and are counted, but trades done on tuesday or wed are not counted in wednedsay night's interest. Lastly, please note the holiday rules for FX: settlements that fall on a holiday in either currency push settlement out a day. If you send a specific question about interest in a web trouble ticket (via acct management), choose categories properly, our customer service group can explain the calculations that were applied to your account precisely. I am quite sure the interest charges are not excessive, especially for larger accounts. If you have a 12K account, then yes, your interest returns are uninteresting.