Every forex trade that remains open at the end of the trading day — typically 5pm New York time, also called the rollover time — is subject to a swap charge or credit. This is the cost (or benefit) of holding a leveraged position overnight. For day traders who close all positions before rollover, swap is irrelevant. For swing traders who hold positions for days or weeks, swap can represent a meaningful ongoing cost — or occasionally a meaningful ongoing credit.
What Is a Swap Rate?
When you hold a forex position overnight, you are effectively borrowing one currency to buy another. The two currencies have different interest rates set by their respective central banks. The swap rate reflects the interest rate differential between those two currencies — you pay interest on the currency you are borrowing and receive interest on the currency you are holding.
If the interest rate of the currency you are holding is higher than the rate of the currency you are borrowing, the swap is positive — you receive a small credit. If the rate of what you are borrowing is higher, the swap is negative — you pay a small fee. In practice, most retail traders pay negative swaps in both long and short directions because brokers add a markup to the raw interbank swap rate.
How Swaps Are Calculated
Your broker calculates and applies the swap automatically at rollover time. The size depends on the currency pair, the direction of your trade (long or short), and your position size.
EUR/USD, long 1.00 standard lot Daily swap rate: −$5.50 (negative) Holding for 5 days: −$27.50 total cost GBP/USD, short 0.10 mini lot Daily swap rate: +$0.20 (positive) Holding for 5 days: +$1.00 total credit
These numbers vary daily as interbank rates fluctuate. Your platform shows the current swap rates in the Market Watch panel — right-click any symbol and select Specification to see the current long and short swap values.
Positive and Negative Swaps
Positive swaps occur when you hold a position in a higher-yielding currency against a lower-yielding one. The classic example is buying AUD/JPY — Australian interest rates have historically been higher than Japanese rates, so holding AUD/JPY long typically generates a positive swap. This strategy of holding high-yield currencies against low-yield ones to collect swap is called carry trading.
Carry trading — buying high-yield currencies and selling low-yield ones to collect overnight interest — is a legitimate institutional strategy. However, the swap credits available to retail traders through brokers are significantly lower than interbank rates, and the exchange rate risk on the position typically far outweighs the swap income. Do not hold positions purely to collect swap.
Triple Swap on Wednesdays
The forex market uses a two-day settlement system — trades settle two business days after they are opened. Because the market is closed on weekends, Saturday and Sunday settlement is processed on Wednesday. This means the swap applied on Wednesday night is three times the standard daily rate — to account for the two additional weekend days.
Standard daily swap: −$5.50 Wednesday swap: −$16.50 (3×) If you hold a position over Wednesday night, you pay three days of swap in a single rollover. This is worth being aware of if you are a swing trader who sometimes closes positions early to manage costs.
How to Find Swap Rates
The most accurate source of swap rates for your account is your broker's platform. In MT4: right-click any symbol in Market Watch, select Specification, and scroll to the swap fields. You will see the long swap and short swap in either pips or currency per lot — check which unit your broker uses.
Swap rates change periodically as central bank rates change. During periods of significant monetary policy shifts — such as when the Fed aggressively raised rates in 2022 to 2023 — swap rates change substantially and the carry trade dynamics shift across many pairs. Checking your current swap rates before opening a position you plan to hold for more than a day is good practice.