logo |

News

    Home   >     Industry    >     Main body

    What is a Forex swap ? (Part 1)

    Abstract:When you trade in the currency market (or Forex), you express your opinion on the direction of a currency pair by buying or selling the base currency (the first currency of the currency pair) ...
    image.png

      When you trade in the currency market (or Forex), you express your opinion on the direction of a currency pair by buying or selling the base currency (the first currency of the currency pair). Therefore, you will make a profit (or suffer a loss) in the counter currency (second currency of the currency pair). This is because you agree with us, as the counterparty, to take a position in a currency before swapping it on a date of your choice with all the current profits (or losses) adjusted in cash in your account.

      The length of time you hold a trading position depends on your strategy and trading plan. Swing traders can hold a position for days or even weeks, while typically, scalpers hold it for just a few seconds. When you are in a position, the price of the currency pair you are trading is not the only price you should watch out for. You should also be aware of any swap fees or finance charges.

      Swap fees are strongly influenced by the underlying interest rate corresponding to each of the two currencies involved. These fees will be applied if you hold the position at the daily rollover time, which occurs at 12:00 a.m. (server time). In the Forex trading world, they are known as “tomorrow next” or “Tom/Next”.

      Intra-day traders will not have to worry about swap fees, as they will always close their positions before the daily rollover time. However, it is important that traders who hold a position overnight, or longer, take heed of swap fees in their trading strategies.

      How to calculate rollover interest rate ?

      Swap fees are determined by interest rate differentials. Another way to observe the difference in interest rates between your base and counter currencies is interest rate spreads. Of course, there may be any differences between two interest rates, so when we deduct them and assess the differential, there is a possibility that you may be charged or received a daily interest. The factors affecting this amount are the lot size, the current market price, and the differential sizbetween the two interest rates at that time. This rate differential forms the basis of the carry trade.

    image.png

      (To be continued ... )

    Latest News

    United Arab Emirates Dirham

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand

    United States Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand
    Current Rate  :
    --
    Amount
    United Arab Emirates Dirham
    Available
    -- United States Dollar
    Risk Warning

    The Database of WikiFX comes from the official regulatory authorities , such as the FCA, ASIC, etc. The published content is also based on fairness, objectivity and fact. WikiFX doesn't ask for PR fees, advertising fees, ranking fees, data cleaning fees and other illogical fees. WikiFX will do its utmost to maintain the consistency and synchronization of database with authoritative data sources such as regulatory authorities, but does not guarantee the data to be up to date consistently.

    Given the complexity of forex industry, some brokers are issued legal licenses by cheating regulation institutes. If the data published by WikiFX are not in accordance with the fact, please click "Complaints "and "Correction" to inform us. We will check immediately and release the results.

    Foreign exchange, precious metals and over-the-counter (OTC) contracts are leveraged products, which have high risks and may lead to losses of your investment principal. Please invest rationally.

    Special Note, the content of the Wikifx site is for information purposes only and should not be construed as investment advice. The Forex broker is chosen by the client. The client understands and takes into account all risks arising with Forex trading is not relevant with WikiFX, the client should bear full responsibility for their consequences.