What is this Swap and Commission in MT4 exactly?

I’ve been using a web based platform for a good while and Im currently in the process of moving over to MT4, I use it make my decisions and it just seems backwards to make decisions in MT4 to apply to a web trader. I digress.

I’ve been demoing MT4 this week at a new broker, getting my EA’s and Indicators all working correctly. I am unsure what Commission is… Is it the spread? Currently its at 0 for all trades, I guess because its a demo account?

Swap is the difference between interest rates between currency pairs? It can either be in the traders favour or against (in terms of total profit from the trade)? Swap does not exist on the web platform I use (I guess its a market maker?) . Is there any way to see swap before placing a trade and can it change at any given point after the trade is executed?

Thank You :47:

If that is true, then you’ve just identified the easiest way on the planet to make yourself exceedingly rich. Use your current broker who doesnt charge swap, to hedge trades that pay positive swap with another broker ! I wouldnt reccommend trading with an MT4 broker, but hopefully you getthe idea.

i have to pay spread and over weekend charges there though, but I dont think swap. How about answering the question?

Sorry traders,
I really don’t understand what swap is ?
Can anyone help to illustrate more, with examples ?

Thank you.

It’s explained in the free babypips school, click the tab above

Dear BM Albert,
The SWAP is financial charge which apply always when a position is held open during the night. These charges are not from the broker, but are coming from the bank institutions and the liquidity providers. Moreover, the swap could be positive or negative depending on the swap rate of the instrument you are trading.

You could calculate your swap cost for any position using the following formula:
Swap charge = (Volume of the order * Swap Rate * Number of days)
Let’s take an example with 1 standard lot of GBPUSD with an example swap rate for short position of -2.5. Then the Swap charge = 1lot * (-2.5) *1day = -2.5 GBP. This will be the amount charged from your account for holding this position for 1 night.

Further to your second question the commission in the MT4 is the commission charged from your broker for every executed trade. It depends on the conditions of the broker you are using.

Hope that was helpful! Cheers!

Allright, so tell me, how can swap be a positive number? I just held a position for 7 days and in the end I saw swap 500CZK.

1 Like

It depends on the difference between the banks Interest rates. If Bank of England is at 0.75 Interest and the Bank of America is at 2.25 and you go short on the GBP/USD then you gain swap = interest. It’s because the interest rate is higher for the USA. And it’s the same for all currencies. Just check the country’s interest rate before you trade.

1 Like

please how can I check the rates?

Commission is broker markup on spread, swap is cost you incur or interest you earn in case of holding position overnight. Consider for example USDZAR sell position. If you enter into leveraged trade, you borrow USD and sell it and obliged to pay interest on your loan while at the same time you buy ZAR and entitled to receive interest on it. Since US interest rates are lower than ZAR you will earn positive interest, which is reflected in positive swap that your broker offer on USDZAR shorts.

Here:
Interest Rate - Countries - List (tradingeconomics.com)