Questions about contract Specifications?

Beginner Questions
1

I would really appreciate if someone can help me figure out what some of these differences are.

First, my situation: I’m currently with FX Choice and they have changed liquidity pools and it seems that my swap fees have quintupled as a result. This is a big issue for me because I’m a swing trader and I hold my positions for days, weeks or months.

For example, I opened a trade on Nov 7, 2017 with the previous provider and I opened another trade (both S&P 500 index) on Dec 22, 2017. I closed both of the trades on Jan 4, 2017 and my swap fees for the first was about $2.50 and the other was $2.25 or something like that. The first was for 2 months and the other for 2 weeks, but both around the same. Both of these trades were for 0.02 lots.

To me it seems like the swap fees have increased, but to be honest the contract sizes changed too and I really don’t know what the differences are with regards to them.

Previous Specifications:  SP500Cash
Digits: 2
Stop levels:  0
Contract Size:  50
Margin Currency:  USD
Profit Calculation Mode:  CFD
Tick Value:  $12.50
Tick Size:  $0.25
Margin Calculation Mode:  CFD
Margin hedge:  25.00
Margin percentage:  2.0%
Swap type:  In percentage terms
Swap long:  -0.865
Swap short:  -2.135
3-days swap:  Wednesday
New Provider:   US500Index
Digits:  2
Stops level: 0
Contract size:  100
Margin currency:  USD
Profit calculation mode:  CFD
Tick value:  1.00
Tick size:  0.01
Margin calculation mode:  CFD
Margin hedge:  50.00
Margin percentage:  2.0%

** The other settings I can't get right now because trade is disabled (Saturday).  But, based on their website information, I'm attached a screenshot of their differences (for swap).

Could someone please explain these differences to me. While I understand what each item is, I don’t really understand the difference in the way they are presented. For example, the difference that the tick size and tick value has on the actual position. Also, the way the swap has changed. Because the contract size has changed, I’m not sure of the impact. To me it looks like LONG positions are 5x in swap fees and short positions are 4x LESS in swap fees. Since I only trade long positions I feel that it might be best to change brokers.

I’m currently looking at a couple of brokers, but one of them is FinPro Trading. However, their specifications are very different, and I’m not sure the impact of those changes either. I think their swaps are a lot less, but again, not sure with the differences in contract specifications:

FinPro Trading
Digits:  1
Stop levels:  0
Contract size:  1
Margin currency:  USD
Profit calculation mode:  Futures  ***  What does this mean?
Tick value:  0.1
Tick value:  0.1
Margin calcuation mode:  CFD-Leverage
Margin hedge:  0.00
Margin percentage:  100.00%
Trade:  full access
Execution:  Market
GTC Mode:  Pendings are good til cancel
Minimal volume: 1
Maximal volume:  100
Volume step:  1.00
Swap type:  In percentage terms
Swap long:  0.65
Swap short:  -0.81
3-day swap:  Friday

Now, if I’m not mistaken, it looks to me that I’ll actually GET PAID to hold a long position with FinPro Trading?

Again, if someone can help out here, I would greatly appreciate it.

Finally… I’ve been reading a lot about ECN vs. STP/NDD brokers and FX Choice is NDD/STP. FinPro Trading is ECN (from what I can tell). It seems that people say ECN is better, however I read something else that said “Market Execution” can not enter SL or TP amounts until the trade has been opened. However, my EA that I coded sets the TP price when it places the order. Is this true what I’ve read?

swaps.png971×215 15.4 KB

One last thing… I just looked at the 15m chart from both brokers and it seems that they are different. Not sure why. FXChoice seems to end at 23:00 on 01/05/18 and FinPro’s last candle is at 20:45 on 01/05/18. Not sure why FinPro doesn’t include the last candle, or why the candle before that looks so different.

finpro-trading.png1116×553 6.28 KB
finpro-trading.png1199×570 6.16 KB

2

Hello @jthornton,

Please allow us to shed some light on your situation. Firstly, we would like to inform you that we have changed our contract sizes and you have to operate a smaller position to have the same volume (for example 0.02 for US500Cash margin and profit wise is the same as 0.01 for US500Index). Additionally, we are now fracturing index dividends in swaps which means your swaps will be positively corrected on long positions and negatively on short positions when dividends are paid. When comparing swap values for FinPro http://www.finprotrading.com/swap-charges and FXChoice https://en.myfxchoice.com/faq/rollover-policy/ on a dividend day, FXChoice would pay more for a long position.

3

thank you @FXChoice_Rep for that response
i was actually wanting him to contact you guys.
appreciate your help

1 Like
4

Hello @FXChoice_Rep,

Thank you for getting back to me. @Marin_K did tell me to contact you guys directly and I did. In fact, I contacted you guys 2 or 3 times through Live Chat but the person that was helping me was not detailed like you just were. They just kept pulling up the data that was represented on the website (i.e. the actual swap amounts) and saying "we have no control as they come from our liquidity providers). I also tried sending multiple emails to customer service and did not get a satisfactory response (along the same lines).

The other thing that I’ve noticed (which I didn’t know until last night) is that the swap amount is now positive for a long position indicating that I will now receive money instead of pay it for a long position.

That said, something that still isn’t clear and maybe @FXChoice_Rep can clear it up for me. While the swaps have either stayed the same or gotten better going from US500Cash to US500Index (when you changed your contract size). The same is not true for USTECHIndex.

USTECHCash (was):
long -0.865
short -2.135

USTECHIndex (is):
long -8.05
short -1.42

So, it seems to me that while the swaps for US500 have actually gotten better, the reverse has happened for the Nasdaq index. And, going from -0.865 to -8.05 is not double which would reflect your contract size difference. The short swap looks like it has gotten better for Nasdaq but I don’t short, I long positions only.

@FXChoice_Rep, could you please shed some more light on this for me.

5

Hello again, jthornton,

Sorry for the delay. Firstly, we do agree that since the contract size changes the US500 actually got better on that particular day when the dividends were paid.

As for the Swap prices, we would like to point out that previously they were calculated in interest (points).

USTECHCash:
long -0.865 points which is -3.21USD
short -2.135 points which is -7.92USD

For the new Index, we are showing the Swap in USD

USTECHIndex:
long -8.05 USD
short -1.42 USD

We hope this has made things more clear to you.

6

Hello @FXChoice_Rep… Thank you for your response. It is a shame that I can’t get these types of detailed answers when I speak with your Live Chat or email a question in.

How can you guys justify changing providers when the swaps increase 2.5x as a result. That is a huge increase and I don’t see how this is good for the customer? Would love to get an explanation. While I know that you sent out an email prior to changing, giving us notice. You only mentioned the size of the contracts. You did not mention that our cost of carrying would go up 2.5x. It actually makes a HUGE difference on my trading strategy since I’m a swing trader. To increase my costs 2.5x means that my profits are a lot less.

7

Dear @jthornton,

We fully understand your concern and appreciate how this change has affected you. The swap increase occurs because of the different method of calculation which is based on the swaps we receive directly from our Liquidity Provider as well as the dividends which are now included into swap.

8

@jthornton

it is not a requirement for swaps to have two floating legs. This leads to the naming convention of different types of XCS

(Floating v Floating) Cross-Currency Swaps: are the normal, interbank traded products.

(Fixed v Floating) Cross-Currency Swaps: are a common customization of the benchmark product, often synthesized or hedged by market-makers by trading a
float v float XCS and a standard interest rate swap (IRS) to convert the floating leg to a fixed leg.

(Fixed v Fixed) Cross-Currency Swaps: a less common customization,

again synthesized by market makers trading two IRSs in each currency
and a float v float XCS.

Mark-to-Market or Non Mark-to-Market: the MTM element and notional
exchanges are usually standard (in interbank markets) but the customization
to exclude this is available.

Non-deliverable Cross-Currency Swap (NDXCS or NDS): similar to a regular XCS,
except that payments in one of the currencies are settled in another currency using
the prevailing FX spot rate. NDS are usually used in emerging markets where the
currency is illiquid, subject to exchange restrictions, or even non-convertible.
This associates with quantos.

Embedded options: exotic customization options exist potentially with
FX options at the maturity of the trade, or swaptions

Now all you need to know is how “they” calculate there swaps.??? lol…:alien: