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Re: 💱 Swap-free accounts: What is the cost?

21 by Ogee
ionone wrote: Thu Jul 18, 2024 5:41 pm I thought that ANY trade on CFD is considered borrowed ?

look here I backtested on a 1 million dollar account
and as soon as I opened a 0.01 lot I have swaps (spelled "echange" in french)
screenshot.645.jpg
yes, all CFDs (CFDs, Options, Futures) are derivates based on the underlying market and all are leveraged accounts but anyone can still buy on the underlying market if you don't want to use leverage and not be charged swap fees (or the higher spread in the case of the Futures market).

In CFDs trading you are borrowing an asset with a down payment, the broker charges a daily fee for lending you the asset and a daily interest fee for the loan if a long side trade, or pay you interest for a short side trade. Though in an age of low interest rates the broker admin and lending fees often cancel out any interest credit to the trader.

As mentioned previously in threads of same name Futures were specifically designed for holding longer term (over 1 week) and avoid daily interest rate payments (swaps fees) but pay a higher spread instead.

Many brokers now offer Islamic type accounts (interest not allowed to be charged) but don't worry, brokers will use other means of reimbursement for their services.
These users thanked the author Ogee for the post (total 2):
ionone, boytoy

Re: 💱 Swap-free accounts: What is the cost?

22 by ionone
Ogee wrote: Thu Jul 18, 2024 6:49 pm yes, all CFDs (CFDs, Options, Futures) are derivates based on the underlying market and all are leveraged accounts but anyone can still buy on the underlying market if you don't want to use leverage and not be charged swap fees (or the higher spread in the case of the Futures market).

In CFDs trading you are borrowing an asset with a down payment, the broker charges a daily fee for lending you the asset and a daily interest fee for the loan if a long side trade, or pay you interest for a short side trade. Though in an age of low interest rates the broker admin and lending fees often cancel out any interest credit to the trader.

As mentioned previously in threads of same name Futures were specifically designed for holding longer term (over 1 week) and avoid daily interest rate payments (swaps fees) but pay a higher spread instead.

Many brokers now offer Islamic type accounts (interest not allowed to be charged) but don't worry, brokers will use other means of reimbursement for their services.
but futures is only 3 months. what If you want to trade long term ?? or is there an automatic conversion of the trades once a new contract period is started ?
Scalping the Century TimeFrame since 1999

Re: 💱 Swap-free accounts: What is the cost?

23 by Ogee
ionone wrote: Thu Jul 18, 2024 8:30 pm but futures is only 3 months. what If you want to trade long term ?? or is there an automatic conversion of the trades once a new contract period is started ?
yes, brokers should have an 'auto rollover' checkbox that keeps your position live but you do pay the spread again but that's still far cheaper than continuous daily swap fees. There is no way that there won't be any cost in borrowing money to enter trades on a leveraged account.

Any half decent broker will have Futures on their demo platform, It will look almost exactly the same as the Spot chart only diverging a bit as the contract close draws near.

(Futures are called Forwards in the currency markets)

Re: 💱 Swap-free accounts: What is the cost?

24 by ionone
Ogee wrote: Thu Jul 18, 2024 9:18 pm yes, brokers should have an 'auto rollover' checkbox that keeps your position live but you do pay the spread again but that's still far cheaper than continuous daily swap fees. There is no way that there won't be any cost in borrowing money to enter trades on a leveraged account.

Any half decent broker will have Futures on their demo platform, It will look almost exactly the same as the Spot chart only diverging a bit as the contract close draws near.

(Futures are called Forwards in the currency markets)
thanks

I read somewhere that on Futures they close the orders and then reopen the same order with the same volume ? is that true? but then any hedge is lost...
I agree to pay spread once more, but If they close orders then it's a problem, Why not close it earlier as well and avoid the swaps altogether.
The fact is that I don't want to close it at all, period !

and you can think that 3 months is enough time, but it's not for me, I want the possiblity to keep orders opened for YEARS along

Jeff
Scalping the Century TimeFrame since 1999

Re: 💱 Swap-free accounts: What is the cost?

25 by Ogee
ionone wrote: Thu Jul 18, 2024 10:15 pm thanks


The fact is that I don't want to close it at all, period !

and you can think that 3 months is enough time, but it's not for me, I want the possiblity to keep orders opened for YEARS along

Jeff
no broker is ever going to do that though are they. There's no way of controlling risk while they would also be extending a free loan for perpetuity.

You would never do that for anyone and nether would any broker.

So it goes back to you just buying the underlying non-leveraged and holding that as a hedge.


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