What is overnight funding?
Based on situation related to dealing conditions and results showed during analysis performed the next decisions should be taken by trader:
- Which asset to be acquired: contracts for differences (so-called CFD), binary, digital or other options, cryptocurrency, stocks, commodities;
- Which strategy to be used: long-termed or short-termed;
- What amount to invest;
- When and what circumstances can trigger long or short positions opening.
For those, who decided to operate with CFD, commodities or cryptocurrencies there are additional options proposed by IQ Option provider in case of high fluctuations of the assets since position on it was opened.
Overnight fee definition
It is wide spread situation, when previously defined tactics requires current and urgent amendments caused by unpredictable changes or increase/decrease in level of volatility of an asset.
This is why such options as automatic position closure based on results reached (profit or loss) or on time helps to safe user from reverse changes risks. The another option to safe from risk of slowing down of expected changes of specific asset is keeping position still opened. Although the service requires insignificant renumeration paid by traders.
Necessity of holding position opened can appear in case of long-term strategy applied. Overnight fee is a charge withdrawn by IQ Option service for maintaining position opened overnight.
Practice different technical instruments and how they work on demo account.
It is used for compensation of expenses incurred during leverage usage. The relative amount is not significant in the context of several days and usually is related to LIBOR plus/minus service fee, that doesn’t exceed 1%.
What influence amount of overnight fee?
As it was mentioned above, position can be fixed opened for specific types of contracts. Among other factors, that influence amount accrued as overnight fee are:
- Type and name of financial asset selected for investment;
- LIBOR rate;
- Quantity of days of accrual;
- Does it applies for long or short position;
- Multiplicator (or leverage amount)
In case trader didn’t applied leverage to multiply gain, there is no any overnight fees. For the rest cases there is a section on the official site of the IQ Option with detailed descriptions on rates for each available instrument opened on long or short position and other conditions of accrual such as days of the week for accrual, for example.
IQ Options offers lots of opportunities to secure trader from risks and for analysis. One of such options suggests user to keep position opened for taking more time in case of fluctuations’ slowing down.
Payment for such service is called overnight fee, because is charged on a regular basis once per 24 hours at 10 pm, and comprises insignificant amount represented in percent to cover leverage used by trader.