How overnight financing works
Overnight financing, also called swap, is the daily charge or credit for holding a leveraged position past the daily cutoff. Because a CFD lets you control a large position with small margin, the broker effectively funds the rest, and that funding has a cost, applied each night the position stays open. It is the price of carrying leverage over time.
Worked example
You hold a $50,000 CFD position with a daily financing rate of around 0.02%. That is roughly $10 a night. Hold for one night and it is trivial; hold for two months and it is about $600, a real drag that a short price move would not cover. The longer you carry a leveraged position, the more financing quietly eats into the result.
Financing on Volity
On Volity, overnight financing applies to leveraged CFD positions held past the cutoff, and the direction can run either way depending on the instrument and whether you are long or short. Spot share ownership has no overnight financing, which is one reason real shares suit long-term holding and CFDs suit shorter, active trades. Always factor financing into any multi-day plan.
Why it matters
Overnight financing is the cost most new traders forget, and it is what makes leverage expensive to hold rather than just risky. Budget it before holding a CFD for days or weeks. Related: swap and CFD.
Learn more in our CFD trading guide.
