A question about swap/roll over...

[OGRooney]

Okay I have three accounts: one in AUD and two in USD (different brokers).

In MT4 if I go into Symbols --> EURCHF ---> Properties, and check the swap rates for a long; the first USD account reads ".05", the second ".00001", and finally my AUD account reads "-2.7" - Why is this?

If someone could please explain this to me, I would be much obliged.

Thanks.

[OGRooney]

Anyone?

[Vixs]

Hi OG,

I've never paid the rollover much attention, as carry trades are a bit long term for my preferred trading style and my trading strategy generally has no open trades at end of day.

Sorry I couldn't be of help, but thought I'd let you know that someone read it.

[Paradiso]

Okay I have three accounts: one in AUD and two in USD (different brokers).

In MT4 if I go into Symbols --> EURCHF ---> Properties, and check the swap rates for a long; the first USD account reads ".05", the second ".00001", and finally my AUD account reads "-2.7" - Why is this?

If someone could please explain this to me, I would be much obliged.

Thanks.

I don't use MT4 brokers myself but generally speaking brokers charge or credit LIBOR +/- their margin. So if london benchmark rate for AUD is 3.7% and your broker takes their 1% cut then for AUD positive balances you would be paid 2.7%.

Unless you are holding million dollar plus positions overnight or more, it's not really worth bothering about.

[TulipFX]

Typing 'Forex rollover' into Google, this was the first link which appeared:
http://www.forextraders.com/forex-st...derations.html

Thorough description.

[OGRooney]

Typing 'Forex rollover' into Google, this was the first link which appeared:
http://www.forextraders.com/forex-st...derations.html

Thorough description.

I'm on top of basic rollover mechanics, that's what confused me - one of the rates was negative rather than just different - I assumed there was something more technical going on than a "spread" ie something to do with the Swiss 0% rate. I guess my main broker is just protecting itself, I did think it was pretty stupid for the other two to actually pay people to buy EURCHF.

[OGRooney]

I don't use MT4 brokers myself but generally speaking brokers charge or credit LIBOR +/- their margin. So if london benchmark rate for AUD is 3.7% and your broker takes their 1% cut then for AUD positive balances you would be paid 2.7%.

Unless you are holding million dollar plus positions overnight or more, it's not really worth bothering about.

Thanks for that.

[TulipFX]

I'm on top of basic rollover mechanics, that's what confused me - one of the rates was negative rather than just different - I assumed there was something more technical going on than a "spread" ie something to do with the Swiss 0% rate. I guess my main broker is just protecting itself, I did think it was pretty stupid for the other two to actually pay people to buy EURCHF.

Works along the same lines as different fruit stores having different prices for apples.

[OGRooney]

Actually, it would the equivalent of one fruit shop owner paying you to eat his apples while the rest are trying to charge

Okay, so now we've established the cause... who's going to pay me the most to eat their apples?
ie does anyone's broker pay a better rate than .05 to go long EURCHF?

[TulipFX]

Careful of the EURCHF peg.

[drew70]

Hi Tulipfx, what exactly do you mean by being careful of the eur.chf peg?

[TulipFX]

http://www.ft.com/intl/cms/s/0/d3176...#axzz22r1jKOlY

To quote above:

There is a “new China” active in the currency markets, according to analysts, as Switzerland’s battle to weaken the franc inflates its stockpile of foreign currency reserves.

The Swiss National Bank was forced to buy tens of billions of euros in May and June after the eurozone crisis worsened, creating strong haven demand for the franc and threatening the ceiling the central bank set for its currency last September.

The SNB is prepared to buy as many euros as it takes to hold the franc at SFr1.20 against the euro to protect the country’s exporters.

[drew70]

[OGRooney]

What should we be careful of though Tulip? As I'm doing a carry trade, as far as I can see, I just need to keep an eye on interest/swap rates and any news regarding the peg. Any positive fluctuations in the price will just benefit me and if I buy at 1.2008ish with a stop just below 1.2, risk is limited to 10-15 pips. No doubt a few things have gone over my head but I think that's the basic situation.


A maths problem for someone:
100 dollars invested for a 1 year term, earning a 1% return per day, compounded daily = ?

I'm a bit rusty on my maths but am I correct in entering this into a scientific calculator as "100 x 1.01^365"?

ie 100 multiplied by 1.01 to the power of 365?

[TulipFX]

Great, as long as you are aware of the peg when you are making your decisions.

[OGRooney]

Great, as long as you are aware of the peg when you are making your decisions.

oh I didn't make my intentions clear enough; my entire trade idea is based on the peg

[Paradiso]

A maths problem for someone:
100 dollars invested for a 1 year term, earning a 1% return per day, compounded daily = ?

I'm a bit rusty on my maths but am I correct in entering this into a scientific calculator as "100 x 1.01^365"?

ie 100 multiplied by 1.01 to the power of 365?

Erm... How did you arrive at the "1% return per day, compounded daily"?

[TulipFX]

oh I didn't make my intentions clear enough; my entire trade idea is based on the peg

I don't know if you're still visiting this forum, but just be careful of your position on the EURCHF. The Swiss Bank is rumoured to be intervening again in the next couple of days and there could be large market gapping.

On the EURCHF many brokers are also massively reducing their leverage. So make sure you don't get caught with a margin call on that either.

Just a heads up

[OGRooney]

Erm... How did you arrive at the "1% return per day, compounded daily"?

Multiple errors: A) I quoted a Wednesday B) assumed use of entire account (even with the floor this would be stupid) C) Thought I could reinvest daily ie buy $100 lots...

Actual return on $100 is approx. .25c a day or a quarter of a percent, and can only be reinvested when $3.50 has been accumulated.* As such, I can only reinvest interest earned approx. every 14 days, as opposed to every day. That is, To reinvest daily I would need an account balance of approx $1400.

*2.40 approx. per 1000 EURCHF + $1 to account for price fluctuations and the spread.


Thanks for the heads up TulipFX... I'm not so worried about further intervention but I would be stuffed if my broker stopped offering such massive leverage on the cross.

As far as market gapping is concerned - Just comparing some charts amongst brokers and it seems the one I've picked to perform my carry trade actually missed all of this years bearish EURCHF volatility - With XEmarkets I count 8 wiks below 1.2 just in June (one even breaches 1.9645). With NordFX on the other hand; the price hit 1.9997 on April 5th, but other than that, has remained above 1.2004 since September 2011. Granted, NordFX are only a 4 digit broker, so volatility should be less apparent, but the contrast between the two is incredible.

PS I'm trying to restrict my visits as I spend to much time posting and not enough time trading
PPS also got caught up playing around with this visual EA builder

[skc]

Multiple errors: A) I quoted a Wednesday B) assumed use of entire account (even with the floor this would be stupid) C) Thought I could reinvest daily ie buy $100 lots...

Actual return on $100 is approx. .25c a day or a quarter of a percent

1% of $100 = $1
1% of $1 = 1c

0.25c from $100 = 1/4 of a percent?