I compared swap points with overseas Forex company AxiTrader

Do you know that most of the interests of individual investors are gathered at "swap points" as one method of investing in Forex? We are going to talk about "swap points" here and also "swap arbitrage”.

I hope overseas Forex beginners would continue to have interest until here, which are definitely great deals to win in Forex investment.

What is Swap point

What is Swap point

For those who are new to overseas Forex and those about to begin investing Forex in the future, swap points may be an unknown experience and there may be people who have never heard of the word. In Forex investment, if you continue to keep the open interest and positions in open buying status without settlement, interest will occur every day. This is called swap interest rate / swap point.

In other words, the swap point is generated by rolling over the open interest / position (carry over the position at the swap point to the next day). When the position is rolled over, the swap interest rate is generated as interest rate difference for one day, then "interest differential gains / losses" will arise. At that time, the overseas Forex beginners must be conscious of receiving interest differentials if it is possible to conduct trading "low interest rate currency" and "buy high interest rate currency".

If Japan's interest rate is 0.1%, if Australia's interest rate is 4.25%, from 4.25% - 0.1%, 4.15% can be received as interest differential. If the exchange rate is 1 AUD at 90 yen, 4.15 (%) × 90 yen × 10,000 currencies, the figure 37, 350 yen comes out. This is the money that can be received in one year, and in one day it is 37,350 yen / 365 days = 102 yen in simple calculation.

It would be quite amazing to be able to earn the profit of 102 yen a day without doing anything. In Forex investment, it is possible to derive reliable profit in this way.

I used the word reliable, but since the Japanese interest rate is the lowest level in the world, it is possible to receive swap points in "buy position" in most currencies, but it will be paid in "selling position". It should also be understood beforehand that the swap point will be deducted by the reverse pattern.

Swap points differ from each overseas Forex companies

There is still something that I would like overseas Forex beginners to study. Usually, although the policy rate of the country becomes the standard and the money which can be earned from the swap point is the same for every overseas Forex company, but if you actually check the swap point of Forex companies, you will see that there is a big difference.

Although it is common to think that the difference will not widen that much even if the interest rate presented by the interbank calculated by the rate at the rollover and the trading overseas Forex company is slightly shifted, but in overseas Forex companies it seems swap points are determined almost independently. So, overseas Forex beginners should strictly compare swap points and take the perspective of choosing an overseas Forex company with a high swap point, for example, for long term investment.

By increasing the number of swap points, it will be a big advantage compared with other overseas Forex companies, but the worth of increase is a burden on overseas Forex companies.

However, at overseas Forex companies, it seems they think it is cheap when considered as "advertising expenses”.

For overseas Forex company AxiTrader

For overseas Forex company AxiTrader

In the case of overseas Forex company AxiTrader, what is it like compared with swap points? Overseas Forex beginners may find it unexpectedly difficult to understand when faced with swap points at overseas Forex companies. This is because in overseas Forex companies, in most cases it is necessary to confirm swap points from MT 4 (MetaTrader 4).

There may still be some overseas Forex beginners who do not understand something about MT4, but MT4 also has a very important role in facing overseas Forex companies, so let’s take this opportunity to get accustomed to using MT4.

MT4 is a high-performance chart software developed by Russian MetaQuotes that has been loved by traders around the world. Domestic Forex companies handling MT4 are limited in Japan, but there are overwhelmingly many overseas Forex companies that adopt MT4. It is a system that is supported by many Forex investors due to overwhelming customizability and automatic trading by EA (expert advisor).

To check the swap point in MT4, right-click in the indicator value display, select the currency pair list, select the currency pair you want to see the swap point, then check in the Swap Long and Swap Short.

If you can open the MT4 here,

You can check the swap point such as
AUDJPY L=0.9、S=-1.3
EURJPY L=0.1、S=-0.5
NZDJPY L=0.4、S=-0.8
CHFJPY L=-0.4、S=0
USDJPY L=0.1、S=-0.5

However, there are things you need to be aware of here, and the number displayed is the interest rate (%) of the swap. In overseas Forex companies, swap points are not directly displayed as "yen".

So to derive yen, you will have to apply the formula.

[Contract size × trading volume (Lot number) × minimum price fluctuation value {= 1/10 multiplier (digit)} × swap number]

For example, for long (buy) swaps per 100,000 currencies of the Australian dollar (AUD / JPY), [contract size] is 100,000, [trading volume (Lot number)] is 1, the [Minimum price fluctuation value], inserts 0 digit numerical value before 1, and 0.01 when digit is 2.

If swap long displayed is 0.68 for example, swap (JPY) = 100,000 × 1 × 0.01 × 0.68 is obtained and the number 680 (JPY) will appear. In other words, 680 yen / day (per 100,000 currencies) here is the reference value of swap.

It may seem troublesome, but do your best.

In case of overseas Forex company GEMFOREX

In case of overseas Forex company GEMFOREX

Nevertheless, those overseas Forex beginners may think that it is troublesome to derive the swap point reference value from MT4. Isn’t there any easier way for overseas Forex beginners to understand....

At overseas Forex company GEMFOREX, we prepare [Swap Point List] for beginners of overseas Forex.

https://gforex.asia/tradecondition/fx/swap.php

You will know the swap point here in a very timely manner like "2017/05/17 22: 02 points". There may be swap points for comparison made on various homepages created by individuals, but what matters most is the timely swap.

You might want to refer to the swap point list of the overseas Forex company GEMFOREX.

Swap Arbitrage in GEMFOREX

I would like overseas Forex beginners to take another step forward and study about "swap arbitrage" as well. It’s the arbitrage by cross trade using swap points. Arbitrage is a method to earn "interest margin" by using the temporary differences in interest rate and price, it is also called "margin taker". The way to do it using deviation between the actual price and the futures price is the general method of arbitrage.

How to take advantage of arbitrage in the Forex investment? For example, swap a day of AUD / JPY of certain overseas Forex company A and B.

Overseas Forex company A + 800 yen -1000 yen
Overseas Forex company B + 400 yen - 500 yen

If you do take a long position in A, on the contrary taking a short position with B in same lot, you can make 300 yen of swap difference into one day's profit. As long as you hold the position you will be able to receive the profit of the swap difference, but the price movements are totaled by both cross trade to offset the profit and loss. While swap arbitrage is the only way you can receive swap difference as a profit.

However, it seems that in many overseas Forex companies, there are many cases that prohibit swap arbitrage among traders. If you want to arrange regular dealings from overseas Forex companies’ side, it will be a natural course of action.

In overseas Forex company GEMFOREX, inter-trader swap arbitrage is forbidden (an act of trading by cross trade and an act of cross trade with multiple accounts of our company), but "cross trade in the same account" is permitted”.

In other words, GEMFOREX is one of the overseas Forex companies that have the potential to be greatly profitable in swap arbitrage.

Let's pay attention to [Swap point list] of GEMFOREX again here.

EURJPY 1.40000 0.30000

The aim of GEMFOREX’ swap arbitrage is,

EURJPY 1.40000 0.30000, that will turn to positive long and short.

The EURUSD 1.25000 1.10000

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