Could someone explain the outrageous Daily Commodities Interest that IG charge when one has a long position in Oil? I understand that in addition to the carry interest, the major element relates to a daily adjustment between the next two months future prices.
Having spoken to their support, I was told that these charges are a way of adjusting the price during the month. He went on to say that it was not really a net cost since we get it back in a lower margin on the basis that they would require a higher margin had they used an alternative approach.
This smacks of a scam as the margin is not a “cost” as such. More importantly we are for ever chasing a moving target as our purchase price is also inflated. So even if one is showing a profit, in fact after these charges one is making a huge loss.
