Key fact: Swap is charged or credited when a position stays open past the daily rollover at 5 p.m. New York time. Most brokers apply a triple swap on Wednesday to account for weekend settlement of spot forex trades.
How swap works
A swap, also called rollover or overnight financing, is the interest adjustment for holding a leveraged forex position past the daily cutoff. Because every currency carries its own interest rate, holding a pair overnight means earning the rate of the currency you are long and paying the rate of the one you are short. The net is credited or debited each night the position stays open.
Worked example
You hold a pair where the currency you are long pays a higher interest rate than the one you are short. The positive difference is credited to you each night, a small carry in your favour. Reverse the position and you would pay the difference instead. Over a single night the amount is tiny, but over weeks on a large position the swap can become a meaningful part of the result.
Swap on Volity
On Volity, swap applies to leveraged positions held overnight, and the sign depends on the pair and your direction. Spot share ownership has no swap, which is one reason CFDs and forex suit shorter trades while real shares suit long holds. For any multi-day forex position, factor the swap into the plan, because it accrues every night silently.
Why it matters
Swap is the carrying cost that turns a flat trade held for weeks into a slow loss, or occasionally a small gain, so ignoring it distorts the real return of any longer-term forex position. Check it before holding overnight. Related: overnight financing and currency pair.
Learn more in our forex trading guide.
