With most Forex brokers when you leave a currency pair position open over the night you’ll get a swap or an interest payment for it. It can be positive (you actually gain money) or negative (you lose money). That payment is usually very small and the majority of the beginning traders just don’t pay any attention to it, since their direct profit or loss from the trading is much greater than this rollover interest. But why do the brokers pay and take this overnight interest payment or swap? And why do some brokers promote interest-free accounts?

The origin of the overnight interest is the fact that in the retail Forex market the physical delivery of the currencies is absent. If you buy €100,000 with your leveraged $1,000 the broker won’t transfer those €100,000 to your bank account. But you’ve paid $100,000 for those euros, even if you borrowed them from your broker. So, if the Forex broker doesn’t deliver the currency to you they technically borrow it from you. In the abovementioned example you borrow $100,000 from the broker and the broker borrows €100,000 from you. And where you have the debt and the loan, there you have the interest rates. The interest rates for the overnight interbank lending (and that’s what you are doing when trading Forex on leverage) are set by the central banks. For example, the rate that you pay for borrowing the dollars from your broker is set by the Federal Reserve System, while the interest rate that the broker pays to you for borrowing the euros from you is set by the European Central Bank. The difference between those two rates is the final overnight interest or swap rate.

Let’s look at this rate calculation. You buy a standard lot (100,000 units) of EUR/USD with your account being in the U.S. dollars with the leverage of 1:100. The current Fed rate is 0.25% and the current ECB rate is 1.5%:

1. You use $1,000 as the margin.
2. You borrow $100,000 from your Forex broker.
3. You buy €100,000 with the borrowed money.
4. You lend €100,000 to your broker (because it won’t deliver the currency to you, anyway).
5. You need to pay 0.25% yearly or 0.00068% daily for your borrowed $100,000.
6. Your Forex broker needs to pay 1.5% yearly or 0.00411% daily for its €100,000 borrowed from you.
7. In the end, the broker needs to pay the difference between €4.11 and $0.68 for each day that your position is open. That’s your positive swap or overnight interest.


What would happen if you didn’t buy that standard lot of EUR/USD but went short on it instead? You’d have to pay that difference to your broker.

The problem is that in reality brokers don’t pay or take the exact amounts for the overnight interest. They minimize the swap if they pay it out and maximize if you do. That way they try to avoid the risks. But that’s certainly not very fair.

Why do some of the brokers claim that they don’t pay or take overnight interest? Because the interest is viewed inappropriate by one of the most popular religions in the world — Islam. Some Forex brokers offer interest-free accounts by request and charge a fixed commission per trade to compensate their interest-based losses. Some brokers provide only interest-free accounts and usually don’t charge any commissions in that case.

How can you gain advantage from the overnight interest? First, you can use it for carry trade. When you feel that the currency pair with the big positive interest rate difference is going to remain stable or move in your favor for a long period of time you can use the broker’s leverage to receive some ridiculously high interest rate from the swaps only. Another way is to open an account with two brokers — one that offers no-interest policy and another — with the common Forex broker. This way you can hedge your positive interest rate difference position with the no-interest rate position on another broker. In this case you won’t be bothered by the market movement but at the same time you will gain advantage from the positive overnight interest. Of course, such practice is usually considered illegal by the brokers with no swaps, so, I wouldn’t recommend using it.
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if you have looked at forex trading but decided it isn't for you, have you ever thought about mini forex trading? Even if you do not have a lot of money, mini forex trading is a way for you to get started with trading. It is a great way to practice, or even just to trade without the large sums that some traders invest.

Many people are advised to get started with mini forex trading as a way to understand the market and get to know the signs. It basically means that the forex trading contract is a lot smaller than it normally could be. You therefore reduce any risk of losing large sums of money, at the same time as learning the best trading techniques that work for you. When you learn better techniques and make more money from your mini forex contract you may even be able to move onto a larger contract.

Opening a mini forex trading account is not too difficult and only requires a few hundred dollars. Regular forex accounts can require multiple thousands, so it is understandable why mini forex has become so popular. Once you start out your money will still be at risk, just with regular forex, but you will have less to lose since you had a smaller investment in the first place. However, this also means that you will need to use forex trading strategies just as you would with larger forex accounts.

Mini forex trading accounts are great for beginners, but you should always do your research before undertaking any kind of risk.

One Forex System I can recommend to anyone getting started in the Forex market is Forex Phantom released only this year. Forex Phantom is the most astonishing, professional and accurate Forex system to be developed.
You should be familiar with the currencies you wish to trade, as well as doing your research on different forex strategies that could work to make you money. Once you have the right strategy you can soon begin profiting from mini forex accounts.

If you would like to learn more about the Forex market, if your looking for Forex resources or reviews then you can subscribe to my Forex Newsletter and receive a free package of Forex eBooks with over 250 pages of relevant information.
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This article will discuss some of the things you need to know about to avoid making mistakes when trading online.

One of the first thing you must keep in mind is that there are so many systems out there for you to choose from when trading online. A system is not part of any strategy that a broker might give you, nor is it part of the research that you need to do anyway. A system is a universal means of trading with the investment platform and commodity of your choice - based upon the teachings of a seasoned investor. What happens is that they will patent their trading methods and strategies, test them on the live markets and then market it as a sure fire system. While there are many systems out there, there are only a few out there that are actually really good. You need to get one, especially if you are pretty new to the market and I am not talking about just a few weeks only. Even if you have been at it for 1 to 2 years, the advice and tested system of 10 - 15 years is always a good thing.

The second thing you need to have is great money management, which is one of the most critical factors that makes the difference between success and failure. Not keeping track with the money you are putting into the market can often lead to you dropping out sooner or later. A broker's job is not to look out for your money, a broker's job is to make sure they can make money out of you and remember, you are not their only client - so their approach can be quite diluted. You need to look out for your own money and you need to keep a log book. One of the most important things is that you are only investing your risk capital, which means money that you know you can lose without hindering you daily life. Also, it would be a good idea to have some sort of risk capital on the side as well, as a buffer in case you want to continue trading even though you have made a loss.

Last, but not least, you also need to do plenty of research especially if you are trading a commodity you know very little about. When it comes to commodity trading, it is all about knowing the nature of the commodity and how it reacts when the economy changes. Knowing the commodity also means that you will have a pretty good idea how it moves, the direction it is most likely to take as well as the patterns that it has shown in the past few years.

These are just some of the safety measures you need to know when trading online, and for one thing, there is a lot more that you need to know about. So do some research, watch out for the warning signs as well as learn from the mistakes of others.
John H. Anderson is a specialist in Forex Trading with more than a decade of experience. He owns Trade-currency.org where he provides his Forex Trading Review!
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A good Forex broker is quite easy to spot and he or she is usually is attached to a notably good brokerage or bank. This is one of the ways you can spot whether or not the broker that you are talking to is worth their salt, and normally, these good companies have plenty of filtering and accreditation methods that are designed in house to keep their brokers relevant and on the cutting edge of investing.

Usually, their certs and their many achievements are displayed quite prominently either on the website or on their personal resumes, so you know you are getting quality. If you are paranoid, all you need to do is to check with your local financial governance; they usually have their own audit systems that ensure that these financial institutions and brokerages are governed and their quality is maintained. They also check for any sort of fraud or embezzlement cases, so you are pretty sure that you are in good hands if they have a clean bill of financial health attached to them.

Getting a good broker means the difference between getting good advice for your investment strategy or bad advice that could lead you down to road towards losing your entire margins. A good Forex broker is one who also trains you from the start, and they usually do this by either giving you consultation sessions that are one -2 - one, or they set you up with a dummy simulated account that you can practice on. Brokers who throw you into the deep end of the market without doing any of this is one that is either impatient or asking for trouble. Also, make sure that the brokerage you are signing up with is transparent with all their benefits. This means that you should know from the get go how much percentage the broker is entitled to and what services you should be getting. You should know everything about the broker and the company.

One other thing you need to note about a good Forex broker is that they are often quite careful and almost precocious about how much margin you invest in at first. Brokers who just are interested in making the initial percentage will often encourage you to invest as much as you can and ply you with fantastic promises on how rich you will be. If they sound more salesman than broker, then it is time for you to end your relationship with them no matter what. This means that they do not have your interest at heart and is in it just for the money. Well, you could argue that everyone is in it for the money, but a good broker is one that is interested in maintaining a long term relationship with you and ensuring that you continue to prosper in the market. When you prosper, they prosper. These are some of the aspects you need to know when choosing a Forex broker, and with one, you will be assured of a good Forex year on your hands.
John H. Anderson is a specialist in Forex Trading with more than a decade of experience. He owns Trade-currency.org where he provides his Forex Trading Review!
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Since 1867 the "gold standard" has been in use to allow a national currency to be exchanged only for gold in order to "return" money and prevent governments from arbitrary emission, which accelerates inflation. But this "standard" was not able to solve all problems.

The country's growing economy led to the import increase to the point where gold resources were depleted. As a consequence, the amount of money in circulation decreased, interest rates grew and economic activity slowed down to the stage of recession. Then prices usually fell and other countries started to import cheap goods which led to an increase in gold reserves, monetary growth, lower interest rates and overall strengthening of the economy of the initial country. Most countries had been developing according to this "boom-bust" model before World War I, which interrupted the flow of commerce and gold.

After World War II and until 1971 there existed the so-called Bretton Woods agreement under which exchange rates of national currencies were fixed to the dollar, and the dollar itself was pegged to gold with the price per ounce set equal to 35 dollars. It was prohibited for countries participating in the agreement to conduct devaluation in order to improve the exchange rate of its currency.

Post-war reconstruction of the global economy and the increase in trade between the countries demanded a reconsideration of the fixed rate, and in 1971 the Agreement was "temporarily" suspended. Then the history of Forex began. By 1973, currencies of the most developed nations were freely convertible, and their exchange rates were mainly defined by supply and demand. During the 1970s volatility and turnover increased, new financial instruments appeared, and currency trading began to attract venturers.