Swap
a.k.a. Rollover, Overnight fee, Swap rate
The interest paid or charged for holding a forex position open overnight, based on the interest-rate gap between the two currencies.
When you hold a trade past the daily cut-off (usually 5pm New York time), it is "rolled over" to the next day, and your account gets a swap (or rollover) credit or charge.
The amount comes from the interest-rate difference between the two currencies, plus the broker's markup. Buy the higher-yielding currency and you might earn a little. Buy the lower-yielding one and you pay.
Because forex settles two days later, many brokers charge three days of swap on one night of the week, usually Wednesday, to cover the weekend.
What holding overnight costs
- Say your broker shows a swap of −$6.50 per night on 1 standard lot.
- Hold over Monday, Tuesday, Wednesday and Thursday nights.
- Wednesday is charged triple: $6.50 × 3 = $19.50.
- Total: $6.50 + $6.50 + $19.50 + $6.50 = $39.00.
Bottom line: Four nights cost $39, whether the trade was winning or not.
Holding a trade for weeks without checking the swap, then finding the overnight charges ate the profit.
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