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Attachments: North Finance "Swap" calculations
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North Finance "Swap" calculations

  • Post #1
  • Quote
  • First Post: Mar 26, 2007 10:11am Mar 26, 2007 10:11am
I've been evaluating North Finance since last week. I cannot seem to figure out how they calculate overnight swaps. When I ask their support, they always refer me to http://www.northfinance.com/eng/cfd/...rex-contracts/ but it does not explain the calculations involved. I've asked their email support and "Live" support, and they basically cycle around pointing you to the link above and seem unable / incompetent to calculate it either.

I've tested a GBPJPY 1 day swap on a 0.1 lot LONG. The table says 1.18 "points", but the [Trade] and [Account Activity] show 1.00. I wasn't sure that mean "number of base swaps", or what? But now that I've closed 2 swapped trades, it appears to be crediting 1USD per day per 0.1 lot LONG!?

I cannot retrace the calculation based on the formula I was given:
Swap Rate Point * 1000
- - - - - - - - - - - - - - - - - * Lot Size
Base currency rate

http://img164.imageshack.us/img164/3...board01jm2.jpg
Swap points should be the # of pips.

If they give you 1.18 pips on the GBP/JPY, that's the equivalent of about $1 on a mini-lot. ($8.50 a pip * 1.18 * 0.1 lots = $1.00).

So there you go.

Quoting Sympatico
I've been evaluating North Finance since last week. I cannot seem to figure out how they calculate overnight swaps. When I ask their support, they always refer me to http://www.northfinance.com/eng/cfd/...rex-contracts/ but it does not explain the calculations involved. I've asked their email support and "Live" support, and they basically cycle around pointing you to the link above and seem unable / incompetent to calculate it either.

I've tested a GBPJPY 1 day swap on a 0.1 lot LONG. The table says 1.18 "points", but the [Trade] and [Account Activity] show 1.00. I wasn't sure that mean "number of base swaps", or what? But now that I've closed 2 swapped trades, it appears to be crediting 1USD per day per 0.1 lot LONG!?

I cannot retrace the calculation based on the formula I was given:
Swap Rate Point * 1000
- - - - - - - - - - - - - - - - - * Lot Size
Base currency rate

http://img164.imageshack.us/img164/3...board01jm2.jpg
  • Post #3
  • Quote
  • Edited 2:47pm Mar 26, 2007 2:34pm | Edited 2:47pm
Okay, thanks mrmikal, I appreciate the clarification!

So 1 pip on GBPJPY at current price of 232.31 = 0.0043%
0.1 lots of GBPJPY = 10000 GBP, so that's 0.43044 pounds x 1.18 per day = 0.508 GBP
At midnight North Finance server time, GBPUSD was approximately 1.96, so 0.508 x 1397 = $0.996 dollars

I note the swap gains (/costs?) are computed to balance only upon trade exit. Is that the way you see it too?

PS - Now it becomes clear how they explain it, same way as you mrmikal... 1000 / USDJPY price (they say "rate", which is confusing) for 1 lot. So, USDJPY was approx. 118, 1000 / 118 = $8.47 for a full lot, or $0.85 for a mini-lot (0.1), multiply by 1.18 = $1.

OKAY, good, now I know...
Symp,

I don't know exactly how they calculate swaps. The swap gains as I always saw it were calculated daily and realized immediately. Based on the statement snip-it you had, I couldn't really tell, although it looked like the swap was calculated as part of your p/l immediately. However, it looks as if all of your trades were already closed with only 2 trades going longer than a day (I guess over a weekend hold).

Unlike Oanda that had a rolling calculation, most brokers (NF included) always calculate swaps at a specific time of the day whether you held for 10 minutes or the entire day, the swaps would still be the same...maybe that's where the confusion was? I don't know. From my experience, my BALANCE never changed until I realized my profit, but my EQUITY did change after the swaps...furthermore, my AVAILABLE MARGIN always = EQUITY - P/L, so my AVAILABLE MARGIN also changed.

I hope this helps.

Quoting Sympatico
Okay, thanks mrmikal, I appreciate the clarification!

So 1 pip on GBPJPY at current price of 232.31 = 0.0043%
0.1 lots of GBPJPY = 10000 GBP, so that's 0.43044 pounds x 1.18 per day = 0.508 GBP
At midnight North Finance server time, GBPUSD was approximately 1.96, so 0.508 x 1397 = $0.996 dollars

I note the swap gains (/costs?) are computed to balance only upon trade exit. Is that the way you see it too?

PS - Now it becomes clear how they explain it, same way as you mrmikal... 1000 / USDJPY price (they say "rate", which is confusing) for 1 lot. So, USDJPY was approx. 118, 1000 / 118 = $8.47 for a full lot, or $0.85 for a mini-lot (0.1), multiply by 1.18 = $1.


OKAY, good, now I know...
Thanks!

Attached Image
It seems from the demo account I'm running on North Finance, that swap points are not settled in balance daily but only trade closure!

Deutsche Bank seems to have much better swap terms, although they are using a variable leverage (all pairs buy/sell 100K units and all pairs use $1K margin, regardless of base currency)!!! That's disconcerting. Anyone with experience of dbFX?

EDIT: North Finance just confirmed through chat (after pulling their nose a bit) that they do not settle swaps until the trade is closed!!! Their platform (NorthFinance) is not for "carry trades"!!!
Quoting Sympatico
Deutsche Bank seems to have much better swap terms, although they are using a variable leverage (all pairs buy/sell 100K units and all pairs use $1K margin, regardless of base currency)!!! That's disconcerting. Anyone with experience of dbFX?
I don't use dbfx but they appear to be a white label for fxcm although dbfx wont admit it. They use the same platform, same spreads, same look and feel, same data feed. The difference is that you would be opening an account with Deutsche and funds are deposited with Deutsche and that may make some people more comfortable.
Regarding leverage, I much prefer the fixed dollar value of 1k leverage at 100-1 for all pairs as it makes it easier to calculate than having to multiply with base currency for every pair especially when you trade several lots. Several brokers calculate leverage this way, dbfx, FXCM, IBFX and quite a few others. I suppose they do it this way for simplicity.
Quoting PipStar
I don't use dbfx but they appear to be a white label for fxcm although dbfx wont admit it. They use the same platform, same spreads, same look and feel, same data feed. The difference is that you would be opening an account with Deutsche and funds are deposited with Deutsche and that may make some people more comfortable.
Regarding leverage, I much prefer the fixed dollar value of 1k leverage at 100-1 for all pairs as it makes it easier to calculate than having to multiply with base currency for every pair especially when you trade several lots. Several brokers calculate leverage this way, dbfx, FXCM, IBFX and quite a few others. I suppose they do it this way for simplicity.
Thanks for the info!
Although the relative simplicity of fixed margin for fixed lots is appealing, GBPJPY, for instance at this point, makes the leverage nearly 1:200! And as these are standard 100K lots, this platform is not suited for any kind of carry trading, which is a portion/component of what I've been doing strategy-wise. Hmmm... more evaluating, more pondering, more development...
I'm surprised that with your capital base your not looking at an institutional platform. Why bother with the retailers when you can go direct?
btw, you can have SWAP-free account with NorthFinance without any problems. there is no diff between the accounts - just swaps.

cheers
The swap numbers here:
http://www.forexfactory.com/newreply...ote=1&p=257363

is in USD$ not pips value.

Therefore, 1.18 Long GBPJPY is $1.18 per a $10K lot size
BK, the link must be wrong...that or I just don't understand what you're trying to say.

Quoting BurgerKing
The swap numbers here:
http://www.forexfactory.com/newreply...ote=1&p=257363

is in USD$ not pips value.

Therefore, 1.18 Long GBPJPY is $1.18 per a $10K lot size
Quoting mrmikal
BK, the link must be wrong...that or I just don't understand what you're trying to say.
It may look wrong but that is exactly what I am getting on my live account.

ie, Long GBPJPY i get $11.80 per standard lot
Short GBPJPY i pay $18.80 per standard lot.

If that is not what I am getting then, either I was given more to hold long, and charged less to go short.
(ie, 1.88 pip per day for a short GBPJPY = $1.593 per day vs $2.9 to most brokers?)



And yes, you can go long with a hgher swap broerk and hedge it with NF without the hassle of being forced to close it..
  • Post #14
  • Quote
  • Last Post: Apr 5, 2007 6:32pm Apr 5, 2007 6:32pm
I take my word back. I was wrong and MrMikal is correct.

NorthFinance's swap is in PIP value not $$ value.

ie, at their website, those numbers must be multiplied by the pip value of the currency to get the swap rates for the pair on that day.

So for the GBPJPY,

Long is $9.94
Short is -$15.83

So for those of you who could not find a swap free broker and wants to settle with a with low swaps to hedge your GBPJPY, here is the place to go!
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