In Forex, swap is the term used to show the interest that is received or paid for keeping a trade open overnight.
There are 2 types of swaps depending on the position you open.
SWAP SHORT: when you keep a short (sell) position open overnight.
This fee can be calculated by using the following formula:
One Point * Trade Size * Swap Short in Points.
For example: EURUSD: 0.00001*100,000*5.9166= 5.9166 USD
Explanation: you would earn $5.9166 in swaps for keeping 1 lot of EURUSD overnight.
- One Point = Last digit in the price.
- Trade Size = Lots * 100,000 (Contract Size).
- Swap Short in Points = Sell position of the pair/instrument.
SWAP LONG: when you keep a long (buy) position open overnight.
This fee can be calculated by using the following formula:
One Point * Trade Size * Swap Long in Points.
For example: EURUSD: 0.00001*100,000*-11.44605= -11.44605 USD
Explanation: This means you’d pay $11.44605 in swaps for keeping 1 lot of EURUSD overnight.
- One Point = Last digit in the price.
- Trade Size = Lots * 100,000 (Contract Size).
- Swap Short in Points = Buy position of the pair/instrument.