WHY YOU Don't always Receive INTEREST when you are short...

21 de abr. de 2023

Q. I thought that when you go short (sell) that we earn interest (swap fees) per day.

But to my surprise I was actually charged interest on my open trade with AUD/NZD. Was I not meant to earn interest?”

A. Unfortunately, it depends…

With each market you trade, you’ll need to look at the symbol information for each trade you take.

This also depends on the deal the broker has with each market.

For example, when you SELL AUD/NZD you're essentially buying NZD/AUD (as they are currency pairs).

So whether you go long or short, you don't earn interest with short (sell) currencies...

But make sure, you always look at Symbol information and see what swaps are positive when you are short.

With the AUD/NZD you can see you pay -3.35% per year.

That means each day you hold, you’ll have to pay 0.009% per day.

Then with some commodities and indices you’ll either earn interest or you’ll have to pay interest when you short (sell).

For example, with gold you’ll receive an interest of 1.23% per year.

Whereas with cotton you’ll pay 5.4% per year.

With the UK 100 FTSE, you’ll pay an annual interest of -0.24%. And with the Dow Jones you’ll receive 0.74% per year.

Then with local and international stocks, you’ll receive a certain % of interest (swap fees) per year.

So make sure you always check to see what each swap (daily interest fee) entails.

This obviously depends on the Market Maker you're using and if you're using Trading View make sure you see the information from your broker what the interest swaps (fees) are when you go long or short.