I'm new to forex, usually trade futures, and I've been on the fence over using IB vs. Gain. I noticed that the rollover rates and interest paid on USD cash balances was quite a bit better at Gain. For example, on EURUSD last week, Gain relative to IB, had paid +175 bps ann. Sure, that's only about $5 per lot but that can add up over time. Also, Gain is paying 2.5% on USD cash balances. If I understood IB correctly, they're paying 0% for $ amts under $250k or so. I know there are a lot of IB fans here on ET. Is IB that much better that traders don't mind a higher carrying cost? FWIW, IB is no deal on futures commissions either.
Those Gain rates are significantly out of date, the 2.5% rate should have clued you in to that (have you read a business headline or walked into a bank in the past 6 months?). Call Gain and get the correct rates, and tell them to update whatever page you're getting those from. Benchmark Rates as of 20090225 USD Fed Funds Effective1 (Overnight Rate) 0.210% EUR EONIA1 (Euro Overnight Index Average) 1.295%
TraderKGB, Thx for presuming that I'm not aware of mkt interest rates. The rates I mentioned were provided by Gain on Monday via phone and confirmed in an email. The rates seem high, that's the reason I've asked the question here on ET. Also, I was actually more interested in the spread in rollover rates b/t the two firms. Any thoughts on this?
Then they gave you incorrect rates, simply no way they're paying 2.5%. Spread between the two is likely very insignificant (esp. in this low rate environment). It appears that Gain doesn't show their rates online, but if their rates are anything like those listed on their sister site (forex.com), then they are not competitive with IB.
There's no doubt that IB is more transparent on their rates. That is, they give you the benchmark and the spread under the benchmark. With Gain, I wasn't sure if they were being elusive or if they weren't sure of what they were talking about. Or, maybe both?They couldn't give me a benchmark or a spread, just a number.
Trader KGB, Sorry, actually it was Forex.com. They said they were giving me the Gain rates given the account size. I think it sounds a little fishy. Maybe it's just part of a marketing ploy. They said that they weren't teaser rates - but then, who gives a rate w/o saying what it's based off of.
What you may "gain" in rates advantage against IB you will lose in trading costs (slippage, spread, so-called stop hunting) 10-fold if you elect to go with Gain/forex.com. Maybe the reason why they supposedly offer those rates is to entice people (like yourself) to deposit monies there knowing the numbers are in their favor that you will lose more money than you take home. (ask yourself how they are able to offer rates 225 basis points above fed rate.) But it appears based on other threads you have already chosen them but you are only looking for validation from another. Whatever you choose, good luck.
I agree with cstfx's comments. Comparing interest paid/charged by itself might be important if you're buying and holding. But for trading, the spreads are far more significant.