SWAP

What is a Swap Rate?

A swap rate, also known as a rollover rate, is the rate applied when a trader chooses to hold a position overnight. The swap rate comes at a cost or as a gain to the trader depending on the prevailing interest rates and it will be a positive or a negative number. If the rate is positive, it’s a gain for the trader (it will be added to the account) and if it’s negative it’s a cost for the trader (it will be deducted from the account). Swap rates vary by asset and since various market conditions, such as volatility, influence them, they are constantly fluctuating.

When is a Rollover Booked?

Brokers apply the Swap Rate to all trades left open overnight. For example, the market considers 10:00pm GMT (5:00pm EST) the beginning and end of the Forex trading day. If a trader enters a position on Monday at 9:55pm GMT and closes it at 10:10pm, the broker considers it an overnight position. However, a trade opened at 10:01pm GMT on Monday is not subject to rollover until 10:00pm GMT on Tuesday. The net interest earned or deducted for each position held overnight is directly applied to the trader’s account.

What is the 3-days swap rate?

If you hold open a position over Friday night, the amount added or subtracted to your account as a result of the swap rate charged is three times the usual amount. Triple swap rates are charged in the roll-over period on Friday night to account for the settlement of trades over the weekend where no swap rates are charged due to the market being closed. This is due to the fact that banks do not operate on Saturday or Sunday.

How do you find out the instruments Swap Rate?

You can check our Swap Rate in the Resources menu on the website main navigation by checking the instruments link under the Product section.