You close your trades for the day, leave a position open overnight, and the next morning your balance is slightly different — even though price hasn't moved yet. That small adjustment is the swap, also called rollover, and it's a cost (or occasionally a credit) many beginners don't notice until it adds up.
What a swap is
A swap is the interest paid or earned for holding a forex position overnight. Every currency has an interest rate set by its central bank, and when you trade a pair, you're effectively holding one currency and borrowing the other. The swap settles the difference between those two interest rates for as long as you hold the position past the daily rollover point.
"Rollover" refers to the moment the position is carried — "rolled over" — into the next trading day. That's when the swap is applied.
Why it can be a cost or a credit
Because a swap is about the difference between two interest rates, it can go either way:
- If the currency you're effectively holding has a higher interest rate than the one you're borrowing, you may earn a small credit.
- If it's the other way around, you pay the swap as a cost.
The direction depends on the pair and which way you're trading it. Most beginners, most of the time, end up paying rather than earning.
Warning
Swaps are small per night, but they compound. On a position held for weeks, an unfavourable swap can quietly eat a meaningful chunk of your profit — or deepen a loss.
When swaps matter (and when they don't)
Swaps only apply to positions held overnight. That means:
- Day traders who close everything before rollover usually pay no swap at all.
- Swing and position traders who hold for days or weeks need to factor swaps into their plan, since they accumulate every night.
There's also a detail worth knowing: many brokers charge a triple swap on one particular weekday to account for the weekend, when markets are closed but interest still accrues.
The Islamic account note
Because swaps are interest-based, some brokers offer swap-free (Islamic) accounts for traders whose beliefs prohibit paying or earning interest. These replace the swap with an alternative fee structure. If this applies to you, check exactly how your broker handles it.
Risk
Swap is a real trading cost, not a rounding error. Before holding a position for the long term, check the swap rate — a strategy that looks profitable can turn negative once overnight costs pile up.
Know your costs before you hold
Overnight costs are part of the true price of a trade. A regulated broker publishes clear swap rates so you can plan around them. A free demo lets you see how rollover affects a held position before real money is involved.
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