What's SWAP?

Simply put, the SWAP is the interest rate that is paid or charged to you at the end of each trading day.

Let's consider it in more detail using the example of buying the EUR/USD pair. For this transaction, a trader takes a loan from a bank through a broker at interest rate and immediately places it in the form of a deposit in Euro. The conditions for calculating deposit interest are like calculating credit interest, only the interest rates are different. When a trader closes a transaction, they must pay the interest rate in dollars and get a deposit interest in euros - the difference between these rates is the SWAP. If a trader closes a position during the day, then they won't have to pay a SWAP. But if a trader closes a position the next day, or after a few days, then the SWAP must be paid to the bank. In order to calculate the SWAP yourself, it is not enough to just calculate the difference between interest rates. The formula on the screen is true if you hold the trade for a year. If you hold the trade for one day, the amount will be three hundred and sixty-five times less. The percentage must be divided by 365 days a year. It is important to remember that:

  1. A SWAP is only applicable when trading on margin using leverage.
  2. A SWAP can also be positive. In this case, a bank must pay the SWAP to the client.
  3. FX settles on a T+2 basis, positions held over a Wednesday night are charged triple (Friday Saturday and Sunday). However positions held over 3 nights at a weekend are only charged for 1 night.

Updated: 9 months ago