A swap, also called overnight rollover or overnight financing, is an adjustment credited to or debited from your trading account when you hold a position open past the daily market close.
In forex, every trade involves buying one currency and selling another. The swap reflects the interest rate difference between those currencies, along with broker and market adjustments.
How swap rates work
Swap can be positive or negative.
- Positive swap: If the currency you bought has a higher interest rate than the currency you sold, you may receive a credit.
- Negative swap: If the currency you bought has a lower interest rate than the currency you sold, you may pay a charge.
The exact result depends on the instrument, trade direction, account settings, market conditions, and current swap rates.
Example
Suppose you buy 1 standard lot of AUD/USD.
You are buying AUD and selling USD. If the US dollar interest rate is higher than the Australian dollar rate, you are effectively borrowing the higher-yielding currency to hold the lower-yielding one. This can create a negative swap on the long AUD/USD position.
If you sold AUD/USD instead, the swap direction may be different because you would be buying USD and selling AUD.
Triple swap Wednesday
Spot forex generally follows a T+2 settlement cycle. Trades held past rollover on Wednesday are commonly charged or credited three days of swap to account for the weekend.
This is often called triple swap Wednesday.
Where to view swaps
You can view current swap values in your trading platform.
MetaTrader 5
Open Market Watch, right-click the instrument, choose Specification, and review Swap Long and Swap Short.
cTrader
Open the instrument information or Symbol Info panel and review the overnight financing or swap details.
Swap rates can change, so always check platform specifications before holding positions overnight.
Swap-free alternative
If your religious beliefs prohibit paying or receiving interest, TabTrade may offer swap-free account settings where available and approved.
Read more about Islamic swap-free accounts.