Swap Rates

FXTRADING com offers both long and short swap rates for all our currency pairs and CFDs

What Are Forex Swap Rates?

Swaps are holding a rebate or cost on overnight open trades calculated daily and derived from the relevant interbank differentials. Swaps can be either a positive (debit) or negative (credit) to your trade's daily profit and loss depending on where you are long or short and what the interest rates are between the relevant currency pair

Swaps can be either a positive (debit) or negative (credit) to your trade's daily profit and loss

With FXT's Swap Rates, Please Note:

  • Trading spot forex takes two business days to settle from the date of entry with each market convention.
  • The settlement date of cash indices and commodities occur at the end of each business day.
  • With open positions of spot forex. cash indices and commodities. there will be a triple swap credit (or debit) for trades held overnight from Wednesday to Thursday (as per server time). to account for markets being closed over the weekend.

What You Should Know about Forex Swap Rates

Swap rates are only applied to positions held overnight

Swap rates are applied at 00:00 server time

Currency pairs could have negative swap rates on both long and short positions

Whilst swap rates are calculated in points. MT4 and MT5 will automatically convert them into your base currency amount

Each forex currency pair has its own rollover fee, which is measured in the standard size of 1 lot (or 100.000 units)

Triple swap rates are calculated on Wednesday night. to account for the weekend when markets are closed

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What is Carry Trade and How Does it Work?

Currency carry trades are a very popular trading strategy used by forex traders which utilises swap rates. The carry trade involves selling or borrowing a forex currency pair with a low-interest rate and using the proceeds to fund the purchase of another forex currency pair with a higher interest rate. By paying a low-interest rate on one currency pair and collecting the higher interest rate earned against another currency pair, the trader aims to profit from the interest rate difference.

In forex currency trading, a carry trade is a simultaneous action taken by traders who borrow one currency while using it to buy another currency. Collecting higher interest rates on the currency that traders bought while paying a low interest rate on sold currency and the interest rate differential between the two currencies is the traders profit.

The carry trade strategy allows traders to buy low sell high when forex swap rates are in play. However, due to the recent trend of global real interest rate dropping significantly over the past three decades, risk-adjusted returns on carry trades have become less lucrative and difficult to implement

How to Calculate Forex Swap Rates?

Swap rates are calculated automatically by FXTRADING.com's MetaTrader platforms. but traders can calculate forex swap rates themselves using the following formula:

Swap Rate Lots (Volume) Number of Nights = Swap (in base currency)

For instance, let’s say you are trading 5x lots of GBP/USD at FXTRADING.com with a base currency of AUD. The swap long is at −2.19 and swap short is at 0.13. (Please be aware that on Wednesday night the charges are tripled due to weekend holding). Using the following formula shows we should expect a daily swap debit of $10.95 Swap Rate × Lots (Volume) × Number of Nights = Swap (in base currency) The long swap at −2.19 multiplied by 5 lots: −2.19 × 5 lots = −AUD 10.95 However, because the trade was held between Wednesday and Thursday, a triple swap charge is incurred, taking the total days to be charged to five. −10.95 × 5 nights = −AUD 54.75 This is the monetary value of the swap rate on your trade for 5 nights, and because it is a negative number, it means that a total of AUD $54.75 will be credited to your open trade. Exchange Rate Of course, these charges will change depending on which currency your account is in. The above example used an Australian dollar account, but if the same trade was placed using a US dollar account, the swap credit would be as follows. Assuming AUD/USD exchange rate is at 0.7623, when it is converted to USD, the swap profit would be AUD 54.75 × AUD/USD 0.76 = USD 43.61

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