Question about leverage and interest fees

Hello everyone, I use Interactive Brokers and I have a few questions:

1. Does IB charge interest for holding leveraged positions? I dont understand how this works. If I close all of my positions at the end of the day, am I still charged interest?

2.Lets pretend 100 percent of my portfolio is in an equity which I am swing trading. Do the leverage rules still apply? Or Can I only be leveraged to the amount of free cash I have?

Forget everything you know about the equity markets. None of it applies.

You are not charged interest on leverage, regardless how long you hold the position or how much leverage you use. There IS an interest charge on borrowed currency though. If you sell US Dollars and buy Japanese Yen, you will have to pay the 5.25% rollover rate on the USD, but you will be paid 0.25% for the yen. The net cost of a short USD/JPY position is 5% (APY).

If you went LONG the USD/JPY, the payments would be reversed. You would be paid 5.25% of your USD and only have to pay 0.25% for the Yen. You would be paid a net 5% (APY) on your position.

Differerent broker have different rules on this though, so be sure to check their policy. Some require a minimum balance to receive the interest, some just charge you the swap rate regardless which direction your in. Also, each country has a different interest rate, so be sure to look up the current overnight lending rates defined by each countries central bank.

Rollover (or swap) is generally calculated for any position held open at 5pm EST. If you do not have any positions open at this time, you will neither benefit from or be charged the interest.

To deterimine your buying power multiply your cash account balance by the effective leverage rate your broker provides. Most have 100:1 leverage, so a $1,000 account would allow you to control $100,000 worth of currency.

After you blow up a few accounts it will all make sense.

LOL

After you blow up a few accounts it will all make sense. [/quote]