Swap

Transactions on the Forex market are made on Spot terms. It means that all the deals are made with the actual delivery of the currency the next workday after their execution. However, there is no need for the real delivery of the currency in case of speculative trading (speculative trading is something that you are about to start). If you execute order during one workday, the delivery is cancelled. It does not cause any problems. But what if you have to leave your order open for more than one day?

For Wednesday-Thursday rollover, swap is deducted/added in a triple size (for Wednesday, Saturday, Sunday).

What is SWAP?

The operation of the rollover of the position which is called Swap has been created for this purpose. The basis of this operation is that you need to "close" the order and reopen it at the close price. At the same time, funds that are equal to the swap size are deducted from or added to your account. The swap size depends on the interest rates of the Central Banks and the range of other factors. Because the Central Bank of each country sets the interest rate, this leads to a situation wherein the difference between the interest rates of various currencies may be quite considerable. The calculation of the swap rate is carried out in the view of this difference.

Swap

Who and How Calculates Swaps?

Swap is calculated automatically at the end of every trading day. For Wednesday to Thursday rollover, swap is deducted/added in a triple size (for Wednesday, Saturday and Sunday). In the MetaTrader 4 trading platform, you can see all the current swap rates of every currency pair (to do this, right-click and choose "Symbols" in the "Market Watch". Choose the currency pair you need in the appeared window and click the "Properties" button. Swap rates of long and short positions are displayed in points).

Swap in MT4

The size of the swaps can be found in the trading terminal. Swap is deducted from/added to the practice account the same way as it happens on the live accounts.

by Justforex, 2016.10.24

Last Articles
All Articles
The Best Time to Trade USD/CAD
The US dollar and Canadian dollar form one of the most popular currency pairs. It represents a significant quota of daily trade. It's popular among both professionals and ultimate newbies.
Read more
Full Guide to Forex Trading in South Africa
Forex trading is a popular form of short-time investment and a source of additional or main income for many people all over the world. Forex trading is available in South Africa, but many potential traders just do not know how to make the first steps in this field. This full beginner’s guide explains the base of Forex and its key terms.
Read more
How to Learn Forex Trading for Beginners in 2022
We want to present a guide for beginner Forex traders that will give the main ideas on how to start Forex trading in the most effective way and how to earn on purchasing and selling currencies. Professional traders have designed the Forex trader tutorial whose extensive experience helped optimize its structure and content. It offers all the necessary information to start your trading journey in 2022.
Read more