Forex Brokers DON'T want you to trade stocks

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If you take a look at swaps, they are all negative and very high for indices and stocks on ICMarkets MT5

because stocks have an inherent bullish bias, they're easier to trade than forex : just buy the stock and wait for it to go up

but of course if you create a robot that trades indices on forex brokers, you're gonna pay HUGE swaps, and all your profits will be gone

that's why forex broker don't want you to trade indices and get the good money.
But if you still wanna trade indices, then it becomes really complicated and pricey, with brokers like Interactive Brokers that make you PAY for data...just sayin'

Jeff
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Re: Forex Brokers DON'T want you to trade stocks

2
ionone wrote: Tue Oct 04, 2022 12:58 am If you take a look at swaps, they are all negative and very high for indices and stocks on ICMarkets MT5

because stocks have an inherent bullish bias, they're easier to trade than forex : just buy the stock and wait for it to go up

but of course if you create a robot that trades indices on forex brokers, you're gonna pay HUGE swaps, and all your profits will be gone

that's why forex broker don't want you to trade indices and get the good money.
But if you still wanna trade indices, then it becomes really complicated and pricey, with brokers like Interactive Brokers that make you PAY for data...just sayin'

Jeff
I don't normally look at the swaps rate as I don't normally hold a trade overnight but they must be getting more expensive because of rising interest rates.

They are a bit of a drama to work out as most brokers have 4 different calculations, one each for indices, stocks, FX and commodities. Commods for example are a pain as their caculation incorporates a sliding scale price of the forward futures market. Essentially they are the cost of borrowing the leverage you are using and calculated as an overnight fee.

The factors involved are number of contracts, the size of a contract, the overnight interest rate charged and the brokers admin fee (and a borrowing fee if going short). So the interest rate is the only one that's highly variable.

For a long position you are borrowing the leverage so you are debited an overnight fee but on a short position you get credited an overnight fee (minus the admin fee and a fee for borrowing the asset to short). The total after all fees when interest rates were low meant you still often ended up with a overall debit rather than a credit for going short. But now I should think going short should pay quite well.
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Re: Forex Brokers DON'T want you to trade stocks

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Ogee wrote: Tue Oct 04, 2022 3:01 am I don't normally look at the swaps rate as I don't normally hold a trade overnight but they must be getting more expensive because of rising interest rates ...

I should also have pointed out the 3/4 day rule of thumb. If you are intending to stay in a trade for less than 3/4 days you are better off using the spot spread bet or spot CFD market and paying the overnight (swaps) fees.

But if intending to stay in for longer it is more economical to use the Futures market (in FX called Forward market). In the futures market you don't pay overnight fees but pay a larger spread instead. The contracts are 1 month or 3 and if you have not closed the trade before expiry it will be closed automaticall and any profit or loss is realised. Most brokers have an auto rollover option that will open a new trade with you paying the spread over again.

Note the US banned CFDs many years ago and so only have futures and options markets.

Note 2 that few brokers have futures on mt4 and you would need to switch to their in-house platform.
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Re: Forex Brokers DON'T want you to trade stocks

4
Ogee wrote: Tue Oct 04, 2022 5:44 pm I should also have pointed out the 3/4 day rule of thumb. If you are intending to stay in a trade for less than 3/4 days you are better off using the spot spread bet or spot CFD market and paying the overnight (swaps) fees.

But if intending to stay in for longer it is more economical to use the Futures market (in FX called Forward market). In the futures market you don't pay overnight fees but pay a larger spread instead. The contracts are 1 month or 3 and if you have not closed the trade before expiry it will be closed automaticall and any profit or loss is realised. Most brokers have an auto rollover option that will open a new trade with you paying the spread over again.

Note the US banned CFDs many years ago and so only have futures and options markets.

Note 2 that few brokers have futures on mt4 and you would need to switch to their in-house platform.
amazing infos. and US is not really into forex and all and it is a real hastle to trade forex from the US (even if some like Scott Welsh do it successfully)




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