What is the overnight interest on foreign exchange? Exchange platform overnight interest comparison?

Foreign exchange platform/


Investors in the use of foreign exchange platform for trading, if they choose to stay overnight, they will be charged a certain overnight interest. Although the overnight interest is very small, for some investors in medium and long-term transactions, a little makes a lot, which often affects the profits of investors to a great extent. So, what is overnight interest? Is there a foreign exchange platform with or without overnight interest?


What is the overnight interest? Because the foreign exchange overnight interest is usually less, so many investors are not particularly concerned about it, but no matter how small the overnight interest is, it's also their own money. Let's have a detailed understanding of the comparison between the foreign exchange overnight interest and the foreign exchange platform overnight interest.


What is the overnight interest on foreign exchange?


If investors speculate in foreign exchange and choose to hold positions overnight, they will generate overnight interest. The size of overnight interest is mainly related to the bank's lending rate.


Overnight interest can be divided into positive and negative, positive and negative. If we deposit money with the bank, we will generate interest. If we borrow money from the bank, we need to pay interest. When trading, it is actually the process of buying and selling currency, and of course, overnight interest will be generated. Foreign exchange overnight interest is not a global loss, foreign exchange carry trade is to use overnight interest to make money.


Comparison of overnight interest of foreign exchange platform:


As we said above, the overnight interest of foreign exchange is mainly calculated according to the overnight lending rate of each bank, so the size of the overnight interest is similar. And the overnight interest is positive and negative, investors need not worry about overnight interest too much, every foreign exchange platform overnight interest is almost the same.


Do you have overnight interest? Here you can clearly tell investors that as long as it is a formal foreign exchange platform, there will be overnight interest. If investors encounter foreign exchange platform that they do not have overnight interest, then we should consider the formality of the platform.


When dealing in foreign exchange, because the transaction is in the form of buying and selling currency pairs, it involves different interest rates of two different currencies. For example, if an investor buys a euro / US dollar currency pair, he will actually sell US dollars to pay and buy the euro. When the pen position is to be settled the next day, the overnight interest will be generated. But if investors close their positions on the same day, there is no overnight interest.


In the formal foreign exchange platform, the margin of investors is deposited in the third-party custody bank. When investors stay overnight, because of the bank's interest rate, they will generate overnight interest. And the formal foreign exchange platform funds are not deposited in third-party banks, there is no overnight interest problem


[disclaimer] the publication of this article by finance managers for the purpose of transmitting more information does not mean that they agree with their views or confirm their descriptions. The content of this article is for reference only, and does not constitute an investment proposal. Investors operate on this basis at their own risk

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