What is a Forex Swap
What are swap rates?
Swap rates are the interest rate differentials embedded in currency trades.
To put it more simply, consider how a forex trade works: you borrow one currency to buy another. For instance, if you are buying EUR/USD, you are borrowing US dollars and buying euros with the proceeds. In doing so, you are paying interest on the US dollars you borrow, but earning interest on the euros you bought.
Where can I find your swap rates?
Our swap rates are visible on all our platforms, by following these simple steps:
- Click ‘View’ along the top menu
- Select ‘Symbols’
- Select which currency pair you want to see the swaps for, and click ‘Properties’
- You can now see the long and short swap rates in the pop-up window
How do you calculate a swap rate?
Swap debits/credits are calculated as follows:
Current long/short rate * number of lots = swap debit/credit in second currency
Example - 1
Your account currency is AUD and you hold one lot long on AUD/USD on 5 February 2015: +4.96 * 1 = $.4.96, converted to your account currency = A$6.35
Example - 2
Account currency is USD, you hold 2.5 lots short of EUR/GBP on 5 February 2015:
-1.08 * 2.5 = -£2.70, converted to USD = -$4.13
When do you calculate your swap rates?
Our swap rates are calculated each day at 4.59pm New York time/11.59pm MT4 platform time (GMT+2). Trades that have been opened before 4.59pm and held open past this time will be subject to swap rates. Swap rates are tripled on Wednesday at 4.59pm to account for weekends. Please note that this is the standard structure of swaps – however, on weeks where there are holidays, the swap rate structure may be modified to account for the holiday.