Learning Forex: What are Forex Swaps?


Forex Swaps

When you start investing in this financial market you need to take into account other important aspects, besides choosing a good forex platform and a reliable broker. These things to keep in mind are the additional costs you have to pay for leaving positions open overnight.

Since in the forex market you are using high leverage to be able to have a much higher trading power and thus make even more money with small movements of the market, this extra money you are using is borrowed from your broker and has costs. only in positions that are open overnight.
However, there are some currency pairs and position types, which you instead of paying still receive money for keeping those positions open.

The swap is also known as rollover, which is the cost or benefit of keeping a position open overnight, and will be charged whenever you open a position before 23:00 pm (GMT + 0) and leave it open until after 23:00 pm (GMT + 0).
This means that if you keep your position open for 3 days, you will be swapped for each day - in this case you will pay 3 swaps.
This value depends on the broker and can be consulted through your contract or on the operating costs page. For this reason, before leaving positions open overnight, it is important to check the list of swaps at your broker. Although most swaps are negative, there are some currency pairs and types of positions (buy or sell) that instead of charging you money for keeping your positions open, you still pay to keep your positions.

How to calculate the Swap

To calculate payments / interest, you first need to see the Buy / Sell quote for the currency pair in question. For example, we opened a sale transaction for 1 lot on EUR / USD.

Swap selling means that for each rollover, you will receive 4,025 points (0,4025 pips) per 1 lot. Therefore, you will receive $ 4,025 USD per rollover (0,4025 * 10).


Curiosity: Some brokerages offer Islamic accounts (also known as swap free accounts) to clients who are unable to earn or pay interest due to their religious beliefs. 


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