Swap Fees

Understanding Overnight Swap Fees

Overnight swap fees, also known as rollover fees, are charges that traders will incur when they hold positions open overnight. These fees are a critical aspect of trading that can impact your overall profitability. Here’s what you need to know about overnight swap fees:

What Are Overnight Swap Fees?

Overnight swap fees are applied to positions that remain open past the daily cutoff time, which is typically at 00:00 server time.

How Are Overnight Swap Fees Calculated?

The calculation of overnight swap fees depends on several factors, including:

• Interest Rate Differentials: The difference in interest rates between the two currencies being traded. For example, if you are buying a currency with a higher interest rate and selling a currency with a lower interest rate, you may earn a swap fee. Conversely, if the opposite is true, you may incur a fee.
• Position Size: The size of your trade (in lots) affects the amount of swap fee applied.

Types of Swap Fees

1. Positive Swap Fees: When you earn a fee for holding a position overnight due to favorable interest rate differentials.
2. Negative Swap Fees: When you pay a fee for holding a position overnight due to unfavorable interest rate differentials.

When Are Swap Fees Applied?

Swap fees are usually applied daily at the end of the trading day. However, there are specific days when the fees might differ:

• Weekend Swaps: Since the forex market is closed over the weekend, positions held through Friday will typically incur three days’ worth of swap fees.
• Holidays: Swap fees may vary during holidays when markets are closed.

How to Check Overnight Swap Fees

• In the watchlist section, right-click on the selected symbol and select 'Instrument Info'.
  
• To view the values for a long or short swap, refer to the 'Overnight Rate' displayed in pips on the right-hand side.
  
  

What Distinguishes a Swap Short From a Swap Long?

The Swap Short rate is applied when calculating the fee for holding short positions overnight, while the Swap Long rate is used to calculate the fee for maintaining long positions overnight.

How Can I Determine Swap Amounts?

The formula used to calculate swap is the following:

Swap = (pip value) x (swap rate) x (number of nights)

Important: Depending on the symbol, one weekday will have a triple charge rate to account for the upcoming weekend. This adjusted rate will be automatically reflected in the instrument's info, ensuring users can always view the accurate charges.