Swap

Also called: Rollover · Overnight financing · Carry

Swap — The interest credited or debited for holding a position past the daily rollover — small on one night, decisive on a position held for weeks.

Swap is the cost nobody models and long-term positions cannot escape. On an intraday trade it is zero; on a position held for six weeks it can exceed the trade’s own profit, and it accrues silently every single night.

In plain English

A leveraged forex position is two currencies borrowed and lent, so each night it is held there is an interest payment in one direction. Your broker computes it against the interest-rate differential between the two currencies, adds its own markup, and credits or debits your account at the rollover time — 5pm New York for most brokers.

It can be positive. Holding a currency with a high policy rate against one with a low rate can pay you to keep the position open, which is the carry trade in its simplest form. In retail accounts the broker markup usually eats most of it, and on many pairs both directions are negative, which tells you where the markup is.

The detail that surprises people is triple swap on Wednesday. Spot forex settles two business days forward, so the position held over Wednesday night is charged for the weekend as well. One night in seven costs three, and a strategy that habitually holds midweek pays materially more than its own arithmetic suggests.

The formula

Swap ≈ position size × (rate differential ± broker markup) ÷ 365 × nights Wednesday counts as three nights

Charged on the full position value, not on the margin. Leverage does not reduce it.
Quoted by most brokers in points per lot per night, which is the form to convert from.
Some brokers offer swap-free "Islamic" accounts, usually with a fixed administration fee or a wider spread instead.

Swap is the one cost that grows with time rather than with activity. A strategy taking fifty trades a day pays almost none of it; one taking two trades a month may pay more of it than commission and spread combined.

Worked example — the demo account

The bundled demo account is an intraday one — average hold 7h 29m — so its swap is negligible, which is itself the lesson. Here is the arithmetic on a position that is not.

Position	1.00 lot
Swap quoted	−$8.40 per night
Held 30 calendar days	30 nights
Of which Wednesdays	4	charged triple: 8 extra nights
Total nights charged	38
Total swap	−$319.20

A month-long hold costs $319 in financing — before the trade has been right or wrong about anything.

Compare that with the demo account’s entire commission bill of −$329.04 across 96 trades. One position held for a month can cost more in financing than ninety-six intraday trades cost in commission.

This is why average holding time is worth knowing before you compare cost structures. An intraday trader optimising swap is solving the wrong problem; a swing trader ignoring it is missing the largest line in their cost base.

Every figure above is from the demo account TapeSheet ships with — 96 closed trades, generated from a fixed seed. Open the same account →

What this does not tell you

The caveat is the part worth reading. Most tools put it in a footer, if they print it at all.

Nothing about the rate you will pay tomorrow. Swap rates change with policy rates and with your broker’s markup, and neither is fixed. A carry that was positive when you opened can turn negative while you hold.
Nothing about weekend and holiday variation. The triple charge normally lands on Wednesday but moves around holidays, and some brokers use a different convention on some instruments.
It is not a spread substitute. Swap-free accounts almost always recover the cost through a wider spread or a fixed fee, and the recovery may be larger than the swap it replaced.
The statement gives a total, not a schedule. A trade’s swap column is the accumulated figure, so you cannot see which nights were expensive or when a rate changed underneath you.

Where TapeSheet shows it

Totalled on the Overview beside commission, and shown per trade in the detail drawer. Like commission, it is deducted inside each trade’s net result — a trade that made money on price and lost it to financing correctly shows as a loss.

Questions

Why was I charged three times on Wednesday?

Spot forex settles two business days forward, so a position held over Wednesday night settles on Friday and carries the weekend’s financing with it. It is a settlement convention rather than a broker charge, and essentially every broker applies it — though the day can shift around public holidays.

Can swap be positive?

Yes, when you hold the higher-yielding currency against the lower-yielding one and the broker’s markup does not consume the difference. It is the basis of the carry trade. In retail accounts positive swaps are usually small, and it is worth checking both directions on a pair before assuming one of them pays.

Does swap apply to indices and gold?

Yes, though the mechanism differs — for CFDs on non-currency instruments it is a financing charge on the notional value rather than a currency interest differential, and it is almost always negative in both directions. Index CFDs also adjust for dividends, which appears as a separate credit or debit and can be substantial around ex-dividend dates.

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