Swap Rate
The interest charged or earned for holding a forex position overnight.
Also called: rollover · overnight financing · swap
Written by Javier Sánchez Ros
In plain language
Every currency has an interest rate. Holding a pair means earning interest on the currency you are long and paying it on the one you are short.
The net difference is applied daily as a swap. It can be a credit or a debit depending on direction and the rate differential.
Wednesday rollovers usually carry triple swap to account for weekend settlement.
Worked through
A mini lot held for six weeks at a swap of $0.42 a night
- Ordinary nights charged
- 24
- Wednesdays, charged triple
- 6 × 3 = 18
- Total nights
- 42
- Total swap
- $17.64
Six weeks is thirty rollovers, not forty-two — the market does not roll over the weekend. But each of the six Wednesdays is charged three times, to settle the Saturday and Sunday nobody trades, which brings the count back to forty-two.
The rate here is an illustration; yours comes from your broker and moves with central bank policy. What does not change is the shape: swap accrues quietly, every night, in a column most platforms put on a different screen from the profit and loss.
At $17.64 against a position risking, say, $50, the swap has consumed a third of the risk budget before the price has done anything at all. Run the same position the other way round and that number is a credit instead — which is the entire idea behind the carry trade.
Why it matters
On positions held for weeks, swap can quietly become a significant cost or benefit that no chart-based analysis will show you.
Common mistakes
- Ignoring swap costs on long-held positions in high-differential pairs.
- Being surprised by triple swap on Wednesday.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
Borrowing in a low-interest currency to hold a higher-interest one, collecting the difference.
Two currencies quoted against each other, showing how much of one buys the other.
Using borrowed capital to control a position larger than your account balance.
The firm that routes your orders to the market and holds your account.
The capital your broker requires you to post to open and hold a leveraged position.