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published-date Published: April 25, 2025
update-date Last Update: April 25, 2025

Swap

What is a Forex swap?

A forex swap, also known as a rollover fee, is the interest paid or earned for holding a currency position overnight. It reflects the difference in interest rates between the two currencies in a pair.​

  • Purpose: Swaps compensate traders for the interest rate differential between the currencies involved in a trade.​
  • Impact on profits: Depending on the direction of your trade and the interest rate differential, swaps can either add to your profits or increase your costs.​
  • Variability: Swap rates can fluctuate daily based on market conditions, central bank policies, and broker-specific factors.​
  • Importance for TradeLocker users: Being aware of swap rates helps you make informed decisions and optimize your trading strategy on the TradeLocker platform.​

Good to know: Swap rates are determined by your broker or prop firm. TradeLocker, as a trading platform, does not set or collect any swap fees. For accurate and current information, please consult your broker or prop firm.​

Why do swaps occur?

Swaps arise due to differences in interest rates between the two currencies in a pair. If the currency you buy has a higher interest rate than the one you sell, you may earn interest. Conversely, if it’s lower, you may pay interest.​

How are swap rates calculated?

Swap rates are influenced by several factors:

  1. Interest rate differential
    The difference between the interest rates of the two currencies.​
  2. Position type
    Whether you’re holding a long (buy) or short (sell) position.​
  3. Trade size
    The volume of your trade.​
  4. Broker’s policies
    Different brokers may have varying methods for calculating and applying swap rates.​

Good to know: It’s important to keep in mind that swap rates can change daily based on market conditions and central bank interest rate decisions.​

Do swap rates change daily?

Short answer: Yes

Swap rates can fluctuate daily due to:​

  1. Central bank policies: Changes in interest rates set by central banks.​
  2. Market demand: Supply and demand dynamics in the forex market.​
  3. Broker adjustments: Brokers may adjust swap rates based on their own policies and market conditions.​

Therefore, it’s advised to regularly check the swap rates provided by your broker or prop firm.​

Types of swaps in Forex trading

  1. Swap long: Applied when holding a long (buy) position overnight.​
  2. Swap short: Applied when holding a short (sell) position overnight
  3. Triple swap Wednesday: On Wednesdays, swap charges are typically tripled to account for the weekend when the market is closed.​

Tips to manage swap costs

  • Trade during the day
    Closing positions before the end of the trading day can help you avoid swap charges.​
  • Choose swap-free accounts
    Some brokers offer accounts that don’t charge swaps, often catering to traders who follow swap-free finance principles.​
  • Monitor swap rates
    Regularly check the swap rates for the currency pairs you trade.​
  • Use swap calculators
    Many brokers provide tools to calculate potential swap charges before entering a trade.​

By understanding and managing swaps effectively, you can make more informed trading decisions and optimize your forex trading strategy.​

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