No Swap Accounts

1
I don't like swaps

If you keep an order opened severals days, the swaps can easily eat all the profits

I know about islamic accounts but how does it work ? I think brokers will get their money another way

is Swap only in CFDs accounts ? is there some forex brokers without swaps ?

thanks

Jeff


Re: No Swap Accounts

2
ionone wrote: Sat Apr 13, 2024 3:22 am I know about islamic accounts but how does it work ? I think brokers will get their money another way
From a forex broker-dealer...

"To remain profitable, the broker instead charges fees and commissions, which some may consider a disguised interest, but many researchers approve this method to facilitate trading. Therefore, an Islamic trading account without swaps crosses the riba barrier."
ionone wrote: Sat Apr 13, 2024 3:22 am is Swap only in CFDs accounts ?
No. "Currency swaps" are actually over-the-counter instruments that allow institutional traders to hedge other assets by investing in overnight interest rate differentials, while forex swaps are paid per currency pair by institutional traders in the interbank (prime) forex market.
ionone wrote: Sat Apr 13, 2024 3:22 am is there some forex brokers without swaps ?
I've never seen a retail forex broker-dealer that doesn't charge swaps, marked up swaps, or a substitute fee. I would be very surprised if commercial fatcats pay anything that retail traders don't pay.
“[A]s we know, there are known knowns—there are things we know we know. We also know there are known unknowns—that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know.”—Donald Rumsfeld, 2002

Re: No Swap Accounts

3
ionone wrote: Sat Apr 13, 2024 3:22 am I don't like swaps

If you keep an order opened severals days, the swaps can easily eat all the profits

I know about islamic accounts but how does it work ? I think brokers will get their money another way

is Swap only in CFDs accounts ? is there some forex brokers without swaps ?

thanks

Jeff
Swaps are the daily interest charge you pay for borrowing the leverage you use. The basic calculation is, (number of contracts x value of contract x swap rate).

When you go long you borrow leverage to buy and you pay interest.
When you go short you borrow asset to sell and are paid the interest.

So when going short you can be credited but when interest rates are low and broker fees are applied that credit might turn into a debit.

The cost is usually calculated by the broker at 10pm daily and on Friday at 10PM you are charged x 3 (for Friday plus the weekend).

You can avoid swaps by trading on the Futures market instead (FX called Forwards market), not available on MT4 but will be on the brokers platform. Instead of a daily interest charge you pay a larger spread.

The Futures market was specifically designed for longer term traders and as a rule of thumb if you intend to hold a trade longer than 1 week it's more cost effective to use the Futures market but less than a week then the normal Spot (cash) market is more cost effective.

Re: No Swap Accounts

5
Ogee wrote: Sat Apr 13, 2024 3:48 pm Swaps are the daily interest charge you pay for borrowing the leverage you use. The basic calculation is, (number of contracts x value of contract x swap rate).

When you go long you borrow leverage to buy and you pay interest.
When you go short you borrow asset to sell and are paid the interest.

So when going short you can be credited but when interest rates are low and broker fees are applied that credit might turn into a debit.

The cost is usually calculated by the broker at 10pm daily and on Friday at 10PM you are charged x 3 (for Friday plus the weekend).

You can avoid swaps by trading on the Futures market instead (FX called Forwards market), not available on MT4 but will be on the brokers platform. Instead of a daily interest charge you pay a larger spread.

The Futures market was specifically designed for longer term traders and as a rule of thumb if you intend to hold a trade longer than 1 week it's more cost effective to use the Futures market but less than a week then the normal Spot (cash) market is more cost effective.
what are the brokers proposing futures trading on MT5 tho ?


Re: No Swap Accounts

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ionone wrote: Sat Apr 13, 2024 5:01 pm what are the brokers proposing futures trading on MT5 tho ?
good question but I don't know the answer, I've not used MT5. On broker's own platforms the futures charts are usually from a dropdown box on the spot chart and looks exact the same but with larger spreads but will diverge a bit as contract close gets closer (contracts are usually 1 or 3 month though you can exit at any time).

Re: No Swap Accounts

7
Ogee wrote: Sat Apr 13, 2024 6:11 pm good question but I don't know the answer, I've not used MT5. On broker's own platforms the futures charts are usually from a dropdown box on the spot chart and looks exact the same but with larger spreads but will diverge a bit as contract close gets closer (contracts are usually 1 or 3 month though you can exit at any time).
so Futures have bigger spreads globally and wider spread towards the end of the Contract ? So this is not optimal either, this acts a bit like swaps, but it penalizes not old trades, but new trades as the Contract fades away...

I think I will try to work with swaps, I'm also scared that the spread might be very high.

it's hard enough with low spreads...

Re: No Swap Accounts

8
ionone wrote: Sun Apr 14, 2024 2:53 am so Futures have bigger spreads globally and wider spread towards the end of the Contract ? So this is not optimal either, this acts a bit like swaps, but it penalizes not old trades, but new trades as the Contract fades away...

I think I will try to work with swaps, I'm also scared that the spread might be very high.

it's hard enough with low spreads...
Wise choice.👍

In the past, I traded with AMP Global Clearing LLC (doing business as AMP Futures) because they were the only U.S. futures broker that offered MT5. After a handful of trades, they started sending me MT5 "corrections" several minutes, hours, or days following profitable trades. They claim that their MT5 server is poorly connected to the CME exchange and they claw back large portions of profits. They also worsen losses. Stay far away from such 💩bags.
“[A]s we know, there are known knowns—there are things we know we know. We also know there are known unknowns—that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know.”—Donald Rumsfeld, 2002

Re: No Swap Accounts

9
ionone wrote: Sun Apr 14, 2024 2:53 am so Futures have bigger spreads globally and wider spread towards the end of the Contract ? So this is not optimal either, this acts a bit like swaps, but it penalizes not old trades, but new trades as the Contract fades away...

I think I will try to work with swaps, I'm also scared that the spread might be very high.

it's hard enough with low spreads...
It's purely a durational consideration, If your plan suggests price will be substantially lower after a week or so then Futures is the more economical platform in terms of the cost of the trade, spreads, broker admin fees, borrowing fees, interest charges. But if your plan suggests you should not hold the trade over a weekend then the Spot (cash) platform will be more economical.

At end of contract there is a settlement price as determined by the CME which should be very close to your brokers price (if not change your broker). There can be some speculative action close to contract close but same as Spot you can have a stop loss in place and exit the trade at any time. In any case at close of contract there is a short pause while CME determine the close price and any profit or lose on the trade is realised. If you have the brokers 'rollover' checkbox ticked you will be auto re-entered for the next contract. That's what the Futures platform was designed for, big traders holding positions for weeks or months at a time.

Re: No Swap Accounts

10
Ogee wrote: Sun Apr 14, 2024 5:16 pm It's purely a durational consideration, If your plan suggests price will be substantially lower after a week or so then Futures is the more economical platform in terms of the cost of the trade, spreads, broker admin fees, borrowing fees, interest charges. But if your plan suggests you should not hold the trade over a weekend then the Spot (cash) platform will be more economical.
but you got swaps every day, no ? are swaps bigger during week-ends ?
Ogee wrote: Sun Apr 14, 2024 5:16 pm At end of contract there is a settlement price as determined by the CME which should be very close to your brokers price (if not change your broker). There can be some speculative action close to contract close but same as Spot you can have a stop loss in place and exit the trade at any time. In any case at close of contract there is a short pause while CME determine the close price and any profit or lose on the trade is realised. If you have the brokers 'rollover' checkbox ticked you will be auto re-entered for the next contract. That's what the Futures platform was designed for, big traders holding positions for weeks or months at a time.
but it will be reopened at current price right ? if you had a trade opened at 1000 ticks from the current price it will not reopen at that price ?


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