A swap in Forex trading is an interest rate earned or charged when keeping a trade position open overnight.
What are Short Swaps?
- A SHORT SWAP is when you leave a Sell POSITION open overnight.
- The amount earned or charged will vary according to the instrument you are trading.
Calculating SHORT SWAP:
- Equation: ONE POINT X TRADE SIZE X SWAP SHORTS IN POINTS.
- Example: EURGBP: 0.00001 X 100000 X 0.61 = $0.61.
- This means that you will earn $0.61 for keeping 1 Lot overnight on a Sell Position on EURGBP.
What are LONG SWAPS?
- A LONG SWAP is when you leave a BUY POSITION open overnight.
- The amount earned or charged will vary according to the instrument you are trading.
Calculating LONG SWAPS:
- Equation: ONE POINT X TRADE SIZE X SWAP SHORTS IN POINTS.
- Example: EURGBP: 0.00001 X 100000 X 4.11 = $4.11.
- This means that you will have to pay $4.11 for keeping 1 Lot overnight on a Sell Position on EURGBP.
If you wish to know more regarding where to locate the fees for Short or Long Swaps for any specific instrument, click here.
