A forex swap rate or rollover is defined as the overnight interest added or deducted for holding a position open overnight, this can be earned or paid. Swap rates are determined by the overnight interest rate differential between the two currencies involved in the pair and whether the position is a buy ‘long’ or sell ‘short’.
What you need to know
- Swaps are applied to your trading account only when positions kept are kept open until the next forex trading day.
- Swaps are applied when the rollover occurs at the end of day.
- Some currency pairs may have negative swap rates on both sides, both ‘long’ and ‘short’.
- Swap rates are calculated in points, MetaTrader 4 converts them automatically into the base currency of the account.
- Each currency pair has its own swap charge and is measured on a standard size of 1.0 standard lots (100,000 base units).
- Swaps are calculated and applied on every trading night. On Wednesday night swaps are charged at triple rate the usual rate.
Overnight Swap Rates
You will able to view the swap rates from within your MetaTrader 4 trading terminal by following the process outlined below.
Right click on any instrument in the ‘Market Watch’ section, then left click on the ‘Specification’ option from the dropdown menu , a new window will open that shows the long and short swap rate for the pair selected.