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institutions do, but institutions will have swap much closer to the interbank interest rate differential by central banks….
but retail brokers will do whatever they can to make the retail traders life a misery by claiming
1. because retail are mostly leveraged traders, their use of leverage means the brokers can add to the swap an extra fee for “borrowing money” to trade in the market…..
2. if you are trading spot metals, they will claim that the overnight swap is the “Warehousing costs” involved in trading metals, but actually all trades and transactions are digital…..
3. Swaps could also indicate the broker’s funding costs… the more the bid/ask swaps deviates away from the interbank swap differentials, the more likely that the broker is weaker in terms of acquiring funding in trading those particular currencies….
4. because brokers have to make a decision when a retail trader places a position, to either hedge by attempting to match the retail client’s trade in the interbank market or by taking the opposite direction of the retail clients ie. taking the risk on their books.
brokers can use that excuse to justify their “cost of providing their brokerage services to you”
Part 4. is also an indication where a broker has rejected to serve you because you are making money ,means they have not hedged against your trade. they thought they can make a buck out of you losing, but if you win they lose to you.
Some brokers will put you in a shittier execution environment and some broker will downright request you withdraw and terminate services to you….
think of it this way….. Brokerages are essentially Casinos….
they want you to stay for as long as you can so whatever you win from them they will take it back. but if you established that youu are winning money and they deem you have an edge. they will blacklist you as an advantage player…..
just throwing some out….