Swap

Forex swaps are an interest traders pay or collect when carrying positions into a new trading day.

When you carry a position over to a new trading day, the position is subject to swaps. A Swap is a charge that is either credited to or debited from your trading account. Swap rates are based on the interest rate differential of the two assets involved in the trade. Depending on the interest rates, you could be charged interest or earn interest.

Each trading pair will have a swap rate for long positions and short positions. Swap rates can be either positive or negative. If a swap rate is positive, it means you receive interest payments, whereas if the swap rate is negative, it means you pay interest.

Forex swaps are charged at 5 pm New York time, as the trading day closes, just before the market reopens in Sydney. If you close your position before 5 pm New York time, swaps won’t be applied.