What is SWAP and how to calculate it?

Overnight Interest, also known as overnight funding interest or swap interest, is the interest fee or income generated by holding a position overnight in the financial market. 

Swaps can be either negative or positive. If the swap is negative, the company will debit a certain amount from your open position according to the instrument specifications. If the swap is positive, the company will credit your account accordingly. 

When is the SWAP commission charged or credited?

The generally accepted time for swap commission to be debited or credited is 21:00 GMT. If your trade is open at that time, the fee will be applied. Please note that the duration of the trade does not matter — if the trade is open at 21:00 GMT, the swap procedure takes place. 

• Every Wednesday at 21:00 GMT, the SWAP for currency pairs, as well as gold and silver, is debited/credited at a triple rate.

• For all other instruments (except cryptocurrencies), SWAP is debited/credited every Friday at 21:00 GMT.

• For cryptocurrencies, the debit/credit of swap depends on the terminal:

  • For MT5, swap is debited every day, meaning there is no triple debit.

  • For MT4, swap is debited at a triple rate every Friday at 21:00 GMT. This is due to the technical features of this terminal.

SWAP values differ depending on whether a trade is opened for buying (Long) or selling (Short). You can view the current SWAP values in the instrument specifications via this link: CFD Specification.

Please note that the company may periodically adjust SWAP values, so we recommend checking the specifications regularly.

Example

A trade is opened on Tuesday at 12:45 GMT for the EURUSD instrument, buying (Long), with a volume of 0.05 lot, and closed on Friday at 14:35 GMT.

According to the specification, the swap for this instrument for buying (Long) for one rollover is -9.77 points (as indicated in the specification, swap is in points per rollover).

Let’s calculate how many times the swap was debited during this period:

• Tuesday 21:00 GMT: swap debited once

• Wednesday 21:00 GMT: swap debited at triple rate

• Thursday 21:00 GMT: swap debited once

• Friday 21:00 GMT: swap not debited (position closed earlier)

So, the swap was debited 5 times while the position was open.

To calculate the total swap cost:

0.05×−9.77×5=−2.442 USD

This is the exact amount that will be debited from your trade.

Important note: 

Swap calculation is performed based on the currency or asset in the second position of the quote.

• For instruments like EURUSD, BTCUSD, XBRUSD, and others where the US dollar is in the second position, the swap is calculated directly in dollars.

• For instruments such as Aluminium, Cocoa, US30, and similar, the US dollar is also considered as the second currency for swap calculation.

However, for cross-rate instruments, such as EURCHF or GBPCAD, the resulting swap will initially be in the currency in the second position of the quote. To calculate the swap in dollars, you must use the instrument’s quote at the moment of the swap debit or credit and perform the conversion mathematically.