Swaps

What are Swaps?

Quite simply, swaps are an overnight interest charge that traders must pay to hold a position open overnight. When a trader wants to keep a position open, they will pay interest on the currency sold, and receive interest on the currency bought. So, the swaps are derived from the interest rates of the countries involved in the currency pair, whether the trader is going long or short and the current market conditions.

• Swap rates are applied at 00:00 platform time.
• Each currency pair has its own swap charge and is measured on a standard size of 1 lot (100,000 base units).
• Swaps are applied each night onto your open positions and when the position is left open it is given a new ‘value date’. On Wednesday night however, the new value date for a trade held open is changed to Monday. Due to this, swaps are charged at triple the rate.
• Check your swaps on your MT4 Market Watch panel. You simply right click, select ‘symbols’, select the instrument and then select ‘Properties’.