Overnight financing (swaps), without the marketing

What is a swap, in plain language?

Keep a trade open past the platform’s “new day” time and you either pay a small fee or earn a small amount. That daily tick is called the swap (or overnight financing).

Where does the swap come from?

• Interest rate gap: Every currency (and many indices/commodities) has an implied rate. Long the higher‑rate side and short the lower‑rate side can earn carry; the opposite can cost you.
• Broker & liquidity costs: Liquidity providers hedge real positions. Hedging overnight has a cost; your swap includes that (+/− margin).
• Extras: For non‑FX (indices, metals, crypto CFDs), the “rate” blends interest, dividend adjustments, borrow/storage costs.

Positive carry vs negative carry

Positive carry = you earn a little each night. Negative carry = it costs you a little each night. Which side you’re on depends on the symbol and direction.

When is the swap charged?

• Rollover time: Most brokers “roll the day” around 5:00 pm New York (check server time). Positions held across that moment get the swap.
• Triple‑swap day: To cover weekends, one day carries 3× the swap. Commonly Wednesday for FX; some indices use Friday.
• Holidays & DST: Bank holidays and daylight‑saving changes can shift schedule or size. Brokers publish calendars—skim them.

How swaps are shown in the platform

• In points/pips per lot per day. Example: swap long = −6.2, swap short = +2.1. Negative means you pay.
• Sometimes as $ per lot per day. Easy: “−$7.40/day.”
• Rarely as an annual %. If you see “% p.a.” the platform converts it to a daily amount each rollover.

Dead‑simple math (so you can compare)

Standard FX “1 lot” = 100,000 units of the first currency. A pip on most FX pairs (with 5 decimals) is 0.00010. Many platforms quote points (the last decimal). Don’t overthink it—check the contract spec to know whether “6.2” means pips or points.

Why your swap differs from a friend’s

• Entity & account type: EU/UK/AU retail vs “international” often have different financing add‑ons.
• Symbol variant: “Cash” vs “Future” CFD, or different suffixes (e.g., .pro, .mini).
• Quote time: Rates move; values change. Compare the same day/time.

No‑swap / “Islamic” accounts

Some accounts remove swaps and replace them with a fixed administration fee after a grace period. Read the small print: which symbols, how many days free, what fee kicks in, and how large positions are handled. This can be great for swing traders—or not—depending on the fee table.

Dividends, metals, indices & crypto

• Equity indices: Longs may receive dividend adjustments; shorts may pay them (or the reverse around ex‑dates). Financing is the interest part; dividends are a separate line.
• Metals & energies: Priced off forwards; financing reflects storage/borrow as well as rates.
• Crypto CFDs: Financing is often higher and more variable. Check the spec twice.

How to compare brokers like a pro (in 5 steps)

1. Pick one symbol & direction. Example: EURUSD long.
2. Fix the size. Use 1 standard lot for apples‑to‑apples.
3. Grab the two numbers. Swap long and triple‑swap day from the contract spec.
4. Convert to $/day/lot. If they quote points/pips, convert (see quick math above).
5. Log a tiny live test. Hold through one rollover and read your account history. Reality > brochure.

Common gotchas (read once, thank yourself later)

• Spread vs swap: A “raw spread” account can still have higher swaps. Compare total cost for your holding time.
• Promo pages: Marketing shows “from” numbers; the contract specification is what your account uses.
• Rollover mismatch: Your local time ≠ server time. Know when your platform flips the day.
• Triples & holidays: Expect a chunky Wednesday or holiday shifts.

Bottom line

Swaps are the overnight “rent” (or pocket money) for keeping a trade open. Check the spec, convert to $/day/lot, and—if you hold trades overnight—pick the broker that’s genuinely cheaper for the way you trade, not just the one with the loudest banner.