Swap (Rollover / Overnight Fee)
Swap is the interest credited or charged for holding a forex position overnight, based on the rate difference between the two currencies.
Swap is the daily interest paid or received for holding a forex position overnight, based on the rate gap between the pair's currencies. Wednesday carries a triple charge for the weekend.
Swap, also called rollover, is the interest adjustment applied to a forex position held overnight, derived from the interest rate difference between the two currencies in the pair. If the currency you bought pays more interest than the one you sold, you receive swap; if less, you pay it. Swap is applied per day at rollover (5pm New York), with a triple charge on Wednesday to cover the weekend. Long-term holders feel swap more than intraday traders.
How It Works
- Calculated from the interest rate differential plus the broker's margin
- Applied at daily rollover, around 5pm New York
- Triple swap on Wednesday covers Saturday and Sunday
Trading Tips
Check swap rates before holding trades for weeks - they can outweigh the price move
Positive carry pairs pay you to hold; negative carry pairs charge you
Some brokers offer swap-free (Islamic) accounts with conditions
Swap (Rollover / Overnight Fee) Example
Say you hold one lot long on AUD/JPY, where Australian rates sit well above Japanese rates. You collect a small credit each night you hold, a few dollars per lot, while the trader short the same pair pays it. Hold past Wednesday and the weekend triple lands in one charge.
How Traders Use Swap (Rollover / Overnight Fee)
Check the swap column before any multi-week hold, because negative carry quietly eats the price move you waited for. Carry traders pick pairs for this payment on purpose. Everyone else should at least know whether holding pays or charges.
Related Terms
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