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 interest rate baked in. Long the higher-rate thing and short the lower-rate thing can earn you carry; the opposite can cost you.
- Broker & liquidity costs: Liquidity providers hedge your position in the real world. Hedging overnight has a cost; your swap includes that cost (+/- their margin).
- Extras: For non-FX (indices, metals, crypto CFDs), the “rate” is a mix of interest, dividend adjustments, and borrow costs.
Positive carry vs negative carry
Positive carry = your position earns 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 your broker’s 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. Your broker’s spec sheet confirms this.
- Holidays & DST: Bank holidays and daylight-saving changes can shift the 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—let the platform or contract spec tell you whether “6.2” means pips or points.
• Platform shows swap long = −6.2 and the spec says “points per lot per day”. Pair is EURUSD. 10 points = 1 pip.
• So −6.2 points = −0.62 pips per day.
• On EURUSD, 1 pip for 1 standard lot ≈ $10. So −0.62 pips ≈ −$6.20/day per lot.
• On triple-swap day: ~−$18.60 if held across rollover.
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).
- Time the quote was fetched: Rates move. Check the spec the day you compare.
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: Long positions may receive dividend adjustments; shorts may pay them (or vice-versa 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 can be higher and more variable. Check the spec twice.
How to compare brokers like a pro (in 5 steps)
- Pick one symbol & direction. Example: EURUSD long.
- Fix the size. Use 1 standard lot for apples-to-apples.
- Grab the two numbers. Swap long and triple-swap day from the contract spec.
- Convert to $/day/lot. If they quote points/pips, convert (see quick math above).
- Log a tiny live test. Hold through one rollover and read your account history. Reality > brochure.
| Broker | Account | Symbol | Swap long | Swap short | Triple-day | $/day (1 lot) |
|---|---|---|---|---|---|---|
| Broker A | Pro | EURUSD | −6.2 pts | +2.1 pts | Wed 3× | ≈ −$6.20 |
| Broker B | Raw | EURUSD | −5.4 pts | +1.6 pts | Wed 3× | ≈ −$5.40 |
Common gotchas (read these once, thank yourself later)
- Caution Spread vs swap. A “raw spread” account can still have higher swaps. Compare total cost for your holding time.
- Caution Promo pages. The marketing page may show “from” numbers; the contract specification is what your account uses.
- Caution Rollover time mismatch. Your local time is not server time. Know when your platform flips the day.
- Note Triples & holidays. Don’t be surprised by a chunky Wednesday or a holiday shift.
Bottom line
Swaps are not mysterious. They’re 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.
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