What is Swap in Trading?

    What is Swap?

    A Forex Swap/Rollover is an overnight interest earned or paid for holding a position open overnight in FX trading, and it’s calculated based on whether your open positions are long or short.

    Rollover interest is applied to a trader’s trading account on each trading day at 5 p.m. Eastern Standard Time, which is 00:00 MetaTrader 4/MetaTrader 5 server time. On Wednesday, rollover is charged triple rated due to market close on Saturday and Sunday.

    Swaps or currency representing roll over rates in view

    Why is Swap Important?

    • Swaps are applied only when positions are kept open until the next forex trading day.

    • You receive some of the most competitive rollover/swap rates in the industry.

    • For some instruments, it is possible to charge swap interests (negative rollover charges) on both sides, both ‘long positions’ and ‘short positions’, of the trade. 

    • Our rollover rates are posted every day and available within the trading platform.

    • Each currency pair has its own swap charge and is measured on a standard size of 1.0 lots (100,000 base units).

    • Rollover rates are updated on a weekly basis the next forex trading day.

    Because our roll over rates reflect some of the most competitive in the industry, this allows us to keep your rollover costs as low as possible when you pay on the rollover, and maximize your credit when you earn on the rollover.

    Where to Find Swaps

    You will be able to view the latest swap rates in your MetaTrader 4 and MetaTrader 5 trading terminal by following the process outlined below. 

    Open MT4/MT5 >> Right Click on any instrument you want to check in the “Market Watch” section >> Left Click on “Specialization” >> A new window will open that shows the long and short swap rate for the pair selected.

    How is Swap Calculated?

    The formula we use for calculating the swap charge for Forex pairs is the following:

    Swap (in base currency) = Swap Rate x Lots (Volume) x Number of Nights

    Who Uses Swaps?

    Swaps are utilized by a diverse range of market participants, including banks, institutional investors, and individual traders.

    Swaps in trading refers to the exchange of cash flows between parties, typically involving interest rate differentials or currency exchanges. They serve various purposes, such as managing interest rate risks, hedging positions, or speculating on future market movements.

    Individual traders, including retail forex traders, may utilize swaps for speculative purposes or to hedge their positions. Speculators may enter into currency swaps to profit from anticipated exchange rate movements, while hedgers use swaps to offset the risk associated with their forex positions. For instance, a trader who holds a long-term position in a foreign currency may use a swap to lock in the exchange rate and reduce the impact of adverse currency fluctuations.

    What are the types of Swaps?

    There are primarily two types of swaps relevant to forex trading: interest rate swaps and currency swaps.

    Interest rate swaps involve exchanging fixed and floating interest rate payments between two parties. In forex trading, interest rate swaps are commonly used to manage overnight positions. Traders who hold positions overnight may either receive or pay interest based on the interest rate differentials of the currency pairs involved.

    Currency swaps, on the other hand, involve the exchange of principal and interest payments in different currencies. Retail forex traders may use currency swaps to hedge against exchange rate risks or speculate on future currency movements.

    Understanding the different types of swaps is crucial for retail forex traders as they can impact the overall profitability and risk management of their trading activities.

    Is there any Regulation on Swaps?

    Yes, there are regulations in place regarding swaps, especially in the context of retail forex trading. Regulatory bodies, such as the Commodity Futures Trading Commission (CFTC) in the United States, oversee the trading of swaps to ensure fair practices and protect the interests of retail traders.

    These regulations aim to promote transparency, reduce systemic risk, and enhance market integrity. Retail forex traders should be aware of and comply with these regulations to ensure they are trading within the legal framework. Adhering to regulatory requirements helps foster a safe and secure trading environment for retail forex participants engaging in swap transactions.

    Why Trade with Baxia

    ZERO Deposit Fees

    Choose from multiple (15+) deposit options such as Skrill, Neteller, Visa/Mastercard, Crypto, Local Bank and others with zero fees.


    Global Market Access

    Trade CFD's (1000+) on a wide range of instruments including Forex, Shares, Commodities, Indices, Precious Metals, Cryptocurrency and Energy.


    6 Ways to Trade

    Trade when you want and anywhere at your convenience with Windows OS, MacOS, iOS, Android, WebTrader and even Linux.


    Sub 30ms Latency Trading

    Trades are executed through liquidity engines in LD4 and access servers in Asia, Europe and Africa.


    Supports Proprietary Trading

    Get access up to $2 million in funded trading for qualified profitable traders on MT5.


    24/5 Unparalleled Service

    Knowledgable and prompt service available on Live Chat, Email, Phone, Whatsapp and Telegram.


    Select Your Platform

    Choose from multiple trading options based on your preference of order types, indicators, charting tools, style of trading and operating environment.

    Get more tools and resources for trading with Baxia Markets

    Beginner or Advanced? View our full suite of tools and resources to help traders of all levels.

    Forex Full Course

    Get started quickly with our free forex trading course for beginners to level up on your trading knowledge.

    Forex Calculators

    Evaluate your risk, monitor profit or loss for each trade & estimate trading costs with our full suite of calculators.

    Economic Calendar

    Follow high impact news and events for the financial markets including the latest economic data.

    Market Research

    Stay up to date with the latest fundamental and technical analysis from the Baxia Markets Analyst team.

    Help Center

    Find answers to common questions and topics related to trading with Baxia Markets and the trading platforms.

    Education Center

    View our collection of free educational resources to help you become a profitable trader and learn risk management.

    More Trading Opportunities

    More than 1000 CFD instruments to trade on multiple asset classes with one broker.


    Precious Metals

    Crypto CFDs