Swap
Swap is the overnight financing adjustment applied to any position held past the daily rollover time, typically 17:00 New York time.
The adjustment reflects the interest rate differential between the two currencies in a forex pair, plus the broker's markup. Long the higher-rate currency receives swap; long the lower-rate currency pays it.
This page covers the mechanic; it is not trading advice.
Swap on a real position
Holding a long EUR/USD position past 17:00 New York means being long EUR (deposit rate 2.50%) and short USD (federal funds rate 5.25%). The differential is −2.75% annualised, applied daily. The broker adds a markup, which is rarely disclosed transparently — typical broker swap costs are larger than the raw interbank differential.
Wednesday rollover applies three days of swap to account for weekend settlement. The position settles two business days after the rollover; rolled on Wednesday, settlement falls on Friday and accounts simultaneously for Saturday and Sunday.
Swap calculation: a daily worked example
For a long EUR/USD position of 1 standard lot held overnight, with the ECB deposit facility rate at 2.50% and the US federal funds rate at 5.25%:
Position notional = 100,000 EUR. Annualised differential = 2.50% − 5.25% = −2.75%. Daily swap before broker markup = 100,000 × −2.75% ÷ 365 = −€7.53 per day. Converted to USD at 1.0850: −€7.53 × 1.0850 = −$8.17 per day.
A typical broker markup of 0.5–1.5% added to the underlying differential pushes the trader-debited rate to roughly −$10 to −$13 per day. The same position held overnight on Wednesday triggers triple-swap settlement: approximately −$30 to −$39 in one debit, accounting for the weekend.
Holding the position one full year at the average debit pays approximately −$3,650 to −$4,745 in swap alone — a 36% to 47% drag on a $10,000 account before any consideration of spread, commission, or directional movement.
Reversing the position direction reverses the sign on the underlying differential. A short EUR/USD position at the same rates earns positive swap before broker markup; the markup then reduces the credit rather than reverses it.
Related terms
Related articles
Common questions
Why does Wednesday have triple swap?
Forex operates on a T+2 settlement cycle: trades made today settle in two business days. A position rolled on Wednesday settles on Friday and simultaneously accounts for the weekend. Wednesday rollover therefore applies three days of swap rather than one. Most platforms display this as a single triple debit or credit on Wednesday's daily statement; this is convention, not malfunction. Some brokers move the triple-swap day to Friday for specific instrument classes; the broker's terms specify the convention used.
What is a carry trade?
A carry trade is a position held long-term to capture positive swap. The trader buys the currency with the higher overnight rate and sells the currency with the lower rate, accumulating the differential daily. The risk is exchange rate movement: a small positive daily swap does not offset a large adverse pip movement. Carry trades historically work in stable-rate environments and break down during volatility regime changes — the unwind of yen-funded carry trades during sudden JPY appreciation is the typical example.