A swap fee, also known as an overnight fee, is a charge or credit applied when you keep a CFD position open past 00:00 server time. Depending on the product and whether you are buying or selling, the swap may be either deducted from or credited to your account. The swap rate reflects from factors such as the interest rate differential, liquidity costs, and other financing costs associated with the underlying market.
How Is Swap Calculated
The calculation method may vary depending on the product and the applicable swap rate. Common calculation methods include:
- Swap Calculated in Points
Swap = Swap Rate × Contract Size × Lot Size × Holding DaysThe exact calculation may also depend on the contract specifications and platform settings.
- Swap Calculated in Account Currency
Swap = Swap Rate × Contract Size × Lot Size × Holding Days- Swap Calculated as a Percentage
Swap = Swap Rate ÷ 100 ÷ 360 × EOD Price × Contract Size × Lot Size × Holding DaysWhere EOD Price refers to the relevant end-of-day price used for the calculation, which may be based on the average of the Bid and Ask prices:
EOD Price = (Bid + Ask) ÷ 2Why does the swap rate change
Swap rates are market-driven and may change because of:
- Prevailing interest rates.
- Market liquidity.
- Financing costs.
- Pricing provided by liquidity providers.
A swap rate previously charged or credited may differ from the rate applied on a later day.
Is positive swap guaranteed income
No. A positive swap rate may provide an overnight credit, but it does not guarantee an overall trading profit. Swap rates may decrease or become negative, and your open position remains exposed to market price movements. Trading losses and other costs may exceed any swap credit received.
Why does positive swap not guarantee a profit?
- Swap rates can change. A positive rate may decrease or become negative.
- Market risk remains. Your open position can lose value as market prices move.
- Losses and costs may exceed the credit. Receiving positive swap does not mean your trade is profitable overall.
What should I check before expecting a swap credit?
Before holding a position overnight:
- Check Swap Long for a Buy position or Swap Short for a Sell position.
- Review the latest Contract Specification and applicable account conditions.
- Confirm the applicable rollover time, including its equivalent in your local time zone.
- Consider whether potential trading losses and other costs could outweigh the swap credit.
After rollover, check the Swap field in your trade details or account history to confirm the amount actually charged or credited. A previously positive swap rate does not guarantee that future overnight holdings will receive a credit.
Risk Warning
Trading Contracts for Difference ("CFDs") and other leveraged financial derivatives involve a high degree of risk and may not be suitable for all investors. Leverage can magnify both gains and losses, and you may lose all of your invested capital. You should ensure that you fully understand the risks involved before trading.
The information provided on this website is for general information purposes only and does not constitute investment advice, a recommendation or an offer or solicitation to buy or sell any financial instrument.