Support Center > Knowledge Base> Article: What are swaps and how are they calculated?

What are swaps and how are they calculated?

Article ID: 107027 Print
Question
What are swaps and how are they calculated?

Answer

Swaps are the interest that is earned/paid on your trade if it is held overnight. Swaps vary depending on the financial instrument you are trading because each instrument will have its own interest rate.

To find out the swap rate for an instrument, please consult the Rollover policy page and scroll down. You will see two rates: Short and Long. If you have a Buy trade, use the Long rate; if you have a Sell, use the Short rate.

To calculate the swap for your trade, use the formula:

Current Long/Short rate * number of lots = Swap amount in the Quote currency

Example:

Let's say your account currency is USD, and you have a 2-lot Sell (Short) trade on of EURGBP. We check the Contract specifications page and see today's swap Short rate is -1.08. So, let's put all that in the formula:

-1.08 * 2 = -2.19

As GBP is the Quote currency in the EURGBP pair, this is -£2.19. Then convert to USD using the current exchange rate.


related articles

Article Details
Views: 2172 Created on: May 31, 2022
Date updated: May 31, 2022

Poor
Outstanding

Risk warning: Forex, spread bets and CFDs are leveraged products. They may not be suitable for you as they carry a high degree of risk to your capital and you can lose more than your initial investment. You should ensure you understand all of the risks.

FXChoice Limited is authorised and regulated by the IFSC (Licence number: 000067/164)

FXChoice Limited registration number: 105,968

© 2021 FXChoice Limited. All rights reserved

Powered by LiveHelpNow Help Desk Software