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interactivebrokers: how to calculate overnight commissions for cfd?
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i have found a good explanation here: http://www.contracts-for-difference.com/financing-charge.html financing is calculated by taking the overall position size, and multiplying it by (libor + say 2%) and then dividing by 365 x the amount of days the position is open. for instance, the interest rate applicable for overnight long positions may be 6% or 0.06. to calculate how much it would cost you to hold a long position for x number of days you would need to make this 'pro rata' meaning that you would need to divide the 0.06 by 365 and multiply it by x days and then multiply this by the trade size. so for example, for a trade size of $20,000, held for 30 days, the interest cost would be about $98.6. it is important to note that due to financing, long positions held for extended periods can reduce returns.
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