WHAT IS FOREX SWAP FEE?
Forex swap is a roll-over interest charge that is either paid or charged to you for holding a forex CFD overnight. In margin trading, you receive interest on long positions, and pay interest on short positions. The difference between these rates is known as “carry.” Carry traders seek to earn profits through this difference.
If you receive more than you are required to pay, the “positive” carry will be added to your trading account. On the other hand, a “negative” carry will be deducted from your trading account. When you open and close a position on the same day, you are not charged, or paid any interest.
HOW TO CALCULATE FX SWAPS?
Use the FP Markets forex swap calculator to determine your swap fee for holding a position overnight. FP Markets offers competitive swap rates to give greater benefit to their traders. Simply select the instrument you wish to trade, your trade size and account currency, and click “Calculate.”
By using our swap calculator, you can calculate the interest rate differentials between the two currencies of your chosen currency pair.
If the result is negative, your account is debited, while if it is positive, the account is credited, with the resulting swap value.
If you are interested in carry trade, you first need to identify a high-yielding and a low-yielding currency pair. Currencies like the Japanese Yen (JPY) and Swiss Franc (CHF) are considered low yielding or funding currencies. The Australian Dollar (AUD) and New Zealand Dollar (NZD) are considered high yielding currencies.
For instance, if the interest rate in Europe is lower than that in Australia, it offers an opportunity to gain carry by going short EUR/AUD. However, for the trade to be a success, the pair has to be trending down. One could hold the length of the trend, and sell at any strength. With FP Markets, you can open an MT4 swap account easily and quickly.
HOW DOES A SWAP FREE TRADING ACCOUNT WORK?
In case you do not want to pay or receive interest, open a swap-free trading account. You will be exempt from overnight interest adjustments or rollover charges with this account.
To check whether your MT4 account is swap-free, simply click on the currency pair in the “Marketwatch” window and select “Symbols” to check the swap rates.
FP Markets swap rates are calculated each day at 5 pm (AEDT). Any trade that has been opened before 5 pm (AEDT) and held open beyond this time, will be subject to swap rates.
Note that swap rates vary for each pair, and market movements cause them to frequently adjust. Traders should know about the respective swap points before entering a trade.