ForexForex swap rates and rollover explained
A swap is the interest adjustment applied when you hold a forex position past the daily rollover. Depending on the pair and direction, you may pay it or receive it.
Why swaps exist
Each currency has its own interest rate. Holding a position overnight is like borrowing one currency to hold another. The swap reflects the difference between the two rates, plus the broker's mark-up, which is why many positions pay a swap in both directions.
When it is charged
Swaps are applied at the daily rollover, usually 5:00 pm New York time. Because spot trades settle two business days later, most brokers charge three days of swap on one weekday, usually Wednesday, to cover the weekend. Some brokers use a different day; the contract specification shows which.
Worked example
Your broker lists the long swap on EUR/USD as −6.5 points per lot, where one point is 0.00001. On one standard lot, one point is worth $1, so holding the position overnight costs about $6.50. On the triple-swap day it costs about $19.50.
Holding that position for four weeks (20 trading days, including four triple-swap days) would cost about $182 in swaps, before spreads and commission. For longer-term trades, swaps can matter more than the spread.
Related: some traders try to earn swap on purpose. See how the carry trade works and its risks.