Tom-Next and Carry Costs
- 8월 21, 2017
- by
Tom-Next and Carry Costs
If you hold a position in a foreign exchange transaction until the end of the trading day, a night adjustment called tom-next is applied. Tom-next is suitable for trading foreign exchange derivatives for speculative purposes to avoid the actual delivery of the currency in which you trade.
Transactions usually expire two days after the transaction.
Therefore, the Tom-Next market mechanism is applied to delivery.
The supplier effectively exchanges new contracts that begin the next day and applies Tom-Next adjustment to the position of the process.
To calculate the Tom-Next exchange rate, you need to take into account the closing price level of the previous location and add or subtract the adjustment to interest.
The difference in interest rates between the two currencies determines whether you will receive or pay interest.
If you buy a currency with a high interest rate, you will have to pay interest while you will get interest payments, while you pay a low interest rate currency.
This is called carry cost.
0 개의 댓글:
댓글 쓰기