Swap (Rollover)

What is a swap?

A swap, also called a rollover fee, is the interest a broker adds to or subtracts from a trading account whenever a leveraged position is kept open past the broker’s daily cut-off time (the point each day marking the end of one trading session and the start of the next). It reflects the fact that a leveraged forex position effectively involves borrowing one currency to buy another, and different currencies carry different overnight interest rates.

If you’re long a currency with a higher interest rate than the one you’re funding the trade with, you may earn a small credit. If it’s the reverse, you’re charged a debit. The swap can be positive or negative depending on the direction of the trade and which currency in the pair carries the higher rate.

How it works in practice

Each broker publishes swap rates per instrument, usually shown per standard lot per night held. Because most spot forex trades settle two business days after the trade date, holding a position over a weekend typically triggers three days’ worth of swap on a single night — commonly applied on Wednesdays for most forex pairs, though the exact day and mechanics can vary by broker and instrument, so it’s worth checking a specific broker’s schedule.

For example, holding a long AUD/JPY position (where the Australian dollar has historically carried a higher rate than the Japanese yen) might earn a small daily credit, while the reverse short position would be charged a debit of similar size. Swap rates change over time as central-bank rates shift, so they should never be assumed constant.

Why swap matters

For most retail day traders who close positions the same day, swap is irrelevant. But for position traders and anyone running a carry trade strategy — deliberately holding a higher-yielding currency against a lower-yielding one to collect the rate differential — swap is a core part of the return (or cost). It’s also why traders following Sharia principles often use an Islamic account, which replaces swap charges with a fixed administrative fee instead.

Because swap compounds the longer a position is held, it should be factored into the total cost of any multi-day or multi-week trade, alongside the spread or commission paid at entry.

Quick recap

• Swap is the overnight interest charge or credit for holding a leveraged position past rollover.
• It can be positive or negative depending on trade direction and the two currencies involved.
• Weekend holding typically applies three days of swap in one charge (day varies by broker).
• Swap matters most for multi-day holders and carry-trade strategies; it’s usually irrelevant for same-day traders.