I’m new to trading and I was wondering if you could help me out with something. I’ve been hearing about swap fees, and I’m not sure if they’re optional or if they’ll be automatically charged to my account. I don’t know too much about it and it’s been making me a little nervous!
Would you be able to explain it to me in a way that’s easy to understand?
Thank you so much everyone!
You can read about the concept of rollover and swap fees here.
Swap fees, also known as rollover fees or overnight fees, are charges that you may need to pay when you hold a trading position open overnight. Here’s a simple explanation:
When you trade, you’re usually borrowing one currency and using it to buy another currency. If you keep the position open overnight, the interest rates for both currencies come into play.
The swap fee is the difference between the interest rates of the two currencies you’re trading.
If the currency you bought has a higher interest rate than the currency you sold, you’ll receive a positive swap fee, which means you earn money. But if the currency you bought has a lower interest rate than the currency you sold, you’ll have to pay a negative swap fee.
These fees are usually charged daily, so holding a position open for multiple days means paying swap fees for each day.
Remember, swap fees ONLY apply to overnight positions, so if you close your position before the end of the trading day, you won’t have to worry about them.
Thank you sir.
Thanks for discussing everything in detail. I saw several brokers offering swap free accounts. Should I use them? Will swap free accounts add any advantage to my trading?
That’s my question too!
Do you know any swap-free brokerage? I want to start trading with just 10$! Will any brokerage let me do sth like that?
Some brokers offer swap free accounts and if you want to trade swap freely, you can go for those brokers.
it’s very unlikely indeed
ForexGump has given an excellent and accurate (of course) overview, just above
swap-free forex accounts were invented for Muslim clients to enable them to trade forex in accordance with Sharia law
in general, there are only two reasons that make a swap-free account sensible for a forex trader:-
you need to use it, to comply with Sharia law
you foresee that you will regularly be holding overnight substantial positions of currencies which have a lower interest-rate than that of the “other currency” involved in the pair (and even then, you’ll probably effectively be paying the equivalent in the form of a wider spread anyway, so in practice this reason’s pretty questionable)