Swap

Swap, also called rollover, is the interest differential paid or earned when holding a forex position overnight past the daily cutoff at 5 PM Eastern time. Since every forex trade involves borrowing one currency to buy another, the swap reflects the difference in interest rates between them. If you buy a currency with a higher interest rate than the one you sell, you earn positive swap. If you buy a lower-rate currency against a higher-rate one, you pay negative swap.

Triple swap, typically applied on Wednesday nights, covers the upcoming weekend when markets are closed but interest still accrues. This means a position held through Wednesday's cutoff receives three days of swap in one charge instead of one. Swap rates vary by broker and change as central banks adjust their policy rates. Active swing and position traders factor swap into their expected returns, while scalpers and day traders who close before the cutoff never face it.

For example, if you are long 1 standard lot of USD/JPY and US rates are 5.25 percent while Japanese rates are 0.25 percent, the interest differential is 5.0 percent annually. Your daily swap might be around $7 positive. Over 30 days of holding, that is $210 of interest income before any price moves. The reverse position (short USD/JPY) would pay the swap, costing similar amounts. On exotic pairs with larger rate gaps, daily swaps can be $50 or more per standard lot.

In copy trading, swap charges and credits flow through to subscriber accounts just like the master. SteadyFlowFX's 9 algorithms trade positions that may cross the daily cutoff, producing swap impact on the 8 currency pairs. The verified Myfxbook 1.73 profit factor reflects returns after swap costs. Subscribers should check their broker's swap rates because they can differ from the master's broker, producing small performance differences even when trade sizes and timing match.