What is swap in trading?

A swap can be understood as an overnight interest adjustment applied when a trading position remains open beyond the daily rollover time, including weekends. Depending on the instrument and market conditions, a trader may either pay a swap charge or receive a swap credit. This outcome is mainly driven by the interest rate associated with the traded currency or asset.

Swap rates are not fixed and vary across:

Liquidity Providers (LPs) are responsible for determining swap rates, and these values are periodically updated on the trading platform based on changes in interest rates and liquidity conditions.

In current market environments, many major economies operate with relatively close interest rates. As a result, both buy and sell positions may carry negative swap rates, meaning traders are charged swap regardless of trade direction. In such cases, the LP plays a greater role in defining the final swap value.

Swap information is usually shown in the symbol specifications as points per lot. However, since platforms may use different swap calculation methods, the way these values appear can vary between brokers and prop firms.

The swap value shown on the trading platform is not the final amount added to or deducted from your balance. Instead, it is a reference value used in the swap calculation formula.

The actual swap charged or credited depends on:

Trade Details:

After applying the platform’s swap calculation formula, the actual swap charged for this position is:

This shows that the displayed swap rate does not directly represent the monetary value charged to the account.

To make this easier, traders can use a Swap Calculator to instantly estimate swap costs based on the instrument, position size, and holding duration.

A triple swap is applied to account for Wednesday rollover, since swaps are not charged on Saturdays and Sundays.

Overnight swap charges can accumulate over time and may significantly affect overall profit and loss. In some cases, high swap costs can even contribute to an account breach.