# A question about swap/roll over...



## OGRooney (1 August 2012)

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.


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## OGRooney (5 August 2012)

Anyone?


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## Vixs (5 August 2012)

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.


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## Paradiso (5 August 2012)

OGRooney said:


> 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?
> 
> ...





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.


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## TulipFX (6 August 2012)

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

Thorough description.


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## OGRooney (6 August 2012)

TulipFX said:


> Typing 'Forex rollover' into Google, this was the first link which appeared:
> http://www.forextraders.com/forex-strategy/forex-rollover-considerations.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.


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## OGRooney (6 August 2012)

Paradiso said:


> 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.


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## TulipFX (7 August 2012)

OGRooney said:


> 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.


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## OGRooney (7 August 2012)

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?


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## TulipFX (7 August 2012)

Careful of the EURCHF peg.


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## drew70 (7 August 2012)

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


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## TulipFX (7 August 2012)

http://www.ft.com/intl/cms/s/0/d317...links/rss/home_uk/feed//product#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.*


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## drew70 (8 August 2012)




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## OGRooney (8 August 2012)

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?


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## TulipFX (8 August 2012)

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


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## OGRooney (8 August 2012)

TulipFX said:


> 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 :


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## Paradiso (16 August 2012)

OGRooney said:


> 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"?
> ...





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


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## TulipFX (3 September 2012)

OGRooney said:


> 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


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## OGRooney (4 September 2012)

Paradiso said:


> 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


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## skc (4 September 2012)

OGRooney said:


> 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?


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## OGRooney (4 September 2012)

skc said:


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




hahahahaha sorry that really does sounds pathetic, 25 cents a day not .25c


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## skc (4 September 2012)

OGRooney said:


> hahahahaha sorry that really does sounds pathetic, 25 cents a day not .25c




Can you tell us which FX/CFD broker is giving you 25bps per day?! You realise that's 91% without compounding.

How can this not be wrong?

Even at 0.25c per day it is still too much.


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## OGRooney (4 September 2012)

skc said:


> Can you tell us which FX/CFD broker is giving you 25bps per day?! You realise that's 91% without compounding.



Damn right it is. NordFX. The 1c return/1000 EURCHF means nothing if you aren't prepared to over leverage your account.

PS it's a welcome account, I'm not sure if swap rates vary amongst the different account types.


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## skc (4 September 2012)

OGRooney said:


> Damn right it is. NordFX. The 1c return/1000 EURCHF means nothing if you aren't prepared to over leverage your account.
> 
> PS it's a welcome account, I'm not sure if swap rates vary amongst the different account types.




OK I see. It's 91% interest per year after leveraging at 500:1. So it's only <2% p.a. which sounds much more realistic.

Well... goo luck with that, I hope your friends at the Swiss Central bank don't do anything too rash... or your $100 might not be very safe.


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## OGRooney (4 September 2012)

skc said:


> OK I see. It's 91% interest per year after leveraging at 500:1. So it's only <2% p.a. which sounds much more realistic.
> 
> Well... goo luck with that, I hope your friends at the Swiss Central bank don't do anything too rash... or your $100 might not be very safe.




I put it to you that my $100 is about as safe as FX gets without hedging


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## TulipFX (4 September 2012)

OGRooney said:


> I put it to you that my $100 is about as safe as FX gets without hedging




I don't understand why you think that. Can you expand? And what are you calling hedging?


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## OGRooney (4 September 2012)

TulipFX said:


> I don't understand why you think that. Can you expand? And what are you calling hedging?




I think that because "the SNB have committed to buying unlimited amounts of foreign currency". If Jordan was saying "oh we might let it drop when we're out for a smoke or we've had a big weekend" then I'd be a bit more wary, worried even, as it is I really don't think there's much to worry about. 

I'm just saying if you were going to risk 100 dollars on a single trade, I think this is a pretty _safe_ one. And by hedging I was referring to the beginners' misconception of the term - buying and selling the same instrument at the same time. 

Either way I'm only risking 10-15 pips, not the whole balance, a single 30 pip spike would completely negate that and provide substantial profit, only problem is we haven't spiked this month :


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## OGRooney (6 September 2012)

and BOOM. I'm a bloody idiot though, exited half my positions yesterday afternoon at breakeven + interest for $5, then spike occurred, exited other half when price fell back to 1.2041 for another $35. Would have been alright if this was just another spike but we're about to see our first daily close above 1.2030 since march 

I'm hoping ECB disappoints and gives me another chance to set myself up at 1.2... I promise I won't screw it up this time 

For anyone who wants to have a real laugh at my misfortune/stupidity... I decided to have a *punt* last night on another account, sold 20k of EURCHF at 1.0234  

hasn't quite gone bad, stop above last nights high


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