What is Swap in Forex trading?

When trading Forex or other CFD (Contract for Difference) financial instruments, swap also known as rollover refers to the interest paid or received for keeping a position overnight.

Each Forex pair has its own swap charge, affected by market conditions and the interest rate associated with countries of the chosen Forex pair traded.

There are two types of Swaps:

1. Swap Long – for long or buy positions.

2. Swap short – for short or sell positions.

Both of which are expressed in points per lot in the MT4 trading platform and will either be a positive or negative number. If positive, at midnight server time it will be added to the trading account and if negative it will be deducted.

Swaps are part of the contract specification for each financial instrument and can be found in the MT4 trading platform or on the TradersTrust website under the product specification tab. For details click here.

Only charged on the positions kept open to the next trading day. Swap is calculated and applied on every trading instrument.
Swap is charged at a triple rate to account for the settlement of trades held over the weekend and will come into effect regardless of if the trades are open over the weekend or not. Triple swap/rollover rates apply as follows:

Wednesdays for Forex and Metals.
Fridays for Indices, Crypto, and Oil. To help us understand Swap rates, let’s look at some examples below. Assuming an investor will open a short position of 1 lot of EURUSD on Monday and keep the position overnight until Tuesday, with a swap short of -0.7 the Swap formula will look like this:
Swap in quote currency = Pip value (for 1 lot) x Number of lots x Number of nights x swap rate (in points) / 10.

*Relevant information can be found in the contract specification.

Number of lots	Contract size	Swap rate	Number of nights	Point value
1	100,000	-0.7	1	0.00001

So, our formula is: 10 x 1 x 1 x -0.7 / 10 = -0.7 USD

If the same trade were opened on a Wednesday and kept open until Thursday, the triple swap rate would apply and the formula would now look like this:

Number of lots	Contract size	Swap rate	Number of nights	Point value
1	100,000	-0.7	3 (due to triple swap)	0.00001

 

 

Our formula is now: 10 x 1 x 3 x -0.7 / 10 = -2.1 USD

The formula used to calculate swaps on metals, oils, and indices is as follows:

Swap = Volume (in lots) x Swap rate x Number of days x Point value

For a 1 lot long position on the XAUUSD opened on Monday a kept overnight until Tuesday with a long swap of -6.05 the swap formula would look like this:

*Relevant information can be found in the contract specification.