Long term trader and interest charged

I have oanda as my broker. I ve been trading long term just recently and plan to hold my trades for month or years even on leverage. I just realized oanda is killing me on interest charged.

I guess my question is are all brokers like this? is there any brokers that are better for traders like me?
Also are there any tax advantages?
how do they even f**king calculate the interest rate charged? The rep I called at Oanda just tells me its whatever Oanda wants it to be

You can use this to calculate carry/interest:

http://fxtrade.oanda.com/analysis/interest-calculator

Actually, Oanda is one of the better firms in this regard. They also pay interest on unencumberd money in your account - the only other firm that does that is IB, and only for big accounts.

BTW, does anyone know of any ECN broker that would allow to take delivery of traded currencies, instead of rolling over open positions via swaps? For example, if I buy 1 lot USD/CAD, I want $100k to be credited to my USD account and $98k CAD to be debited from my CAD account (yes, it requires keeping multi-currency balances).

I know only one such broker: Interactive Brokers. Any others?

I am not sure what you mean by "take delivery". I think would be impossible for a Broker to do that unless you had the 98K CAD in your account.

Basically, asaik, The "currency" your deposit is irrelevant to the trading.
In essence, every transaction is worked out as a loan by the broker.
Example. If you buy 1 lot usd/cad, you are buying 100k usd and have a debt in CAD.. 98K in your example...

So, you owe The Broker 98K CAD , but they are not worry because they have your deposit (in whatever your account currency is) Plus you own 100K usd (that you CAN NOT take delivery). They do not convert anything at this point.

Once you exchange your 100K usd for Cad egain (sell them) at the current usd/cad price you will have "more" or "less" CADs then your 98K debt... that "difference" is the only thing that get converted/exchanged at the current rate of CAD/your account currency and posted in your balance.

Each trade is a individual transaction/loan that need to be settle individually with the Currency you purchased to start with.

I have no idea how a Broker would arrange what you want in between the mentioned process.

Does IB works that way?... or they just have choice of currency deposit like many other brokers?

J.

You can have sub-accounts with Oanda in different currencies. If you want to send out money from your Oanda account in a different currency than your base account (main account), you can use http://fxglobaltransfer.oanda.com/ for that. There is a flat $25 fee involved - the standard fee for outgoing wires, if i remember correctly. So basically you can exchange money on Oanda spreads and make payments, either to yourself or 3rd parties.

On taking delivery:

When you trade spot pairs with most brokers, even ECN's, you're trading a contract for the difference in price between the open and close of the contract itself, not trading a contract which settles by delivery. Think of it like trading swaps.

I agree that swaps are used by most brokers - but not all, and IB does it differently. They settle each trade and credit/debit each sub-account separately. So, yes, I want all of my trades to settle, basically treat all my trades as currency exchange, not as speculative position taking that needs to be closed eventually. For example, I may buy USD/CAD and then sell USD/CHF, and then sell CHF/JPY and so on, and at the end of the day I'll be flat.

To shrike: thanks for Oanda recommendation, I'll take a look. They do offer currency exchange, but I'll need to confirm that it's available through their API. I don't actually intend to transfer out in different currencies.

To jeuro: all of this has nothing to do with the currency of my initial deposit. My deposit just results in a positive balance in the deposit's currency, all others are zero. Over time I get non-zero amounts in all currencies, and pay and receive interest separately for each currency, like in a bank.

Am I asking too much? I can't believe IB is unique in their settlement approach, there must be others.

Its weird that Oanda is charging interest for a long position on the EUR/USD

With EUR interest rates = 0.75%
With USD interest rates = 0.25%

A long position should be +0.50%

Am i getting something wrong?

You should consider libor rate also, as the financial cost for your leverage.

There is a spread applied to interest-rates too. Look it up here:

http://fxtrade.oanda.com/analysis/historical-rates