Hold a currency with a higher interest rate against one with a lower rate and you may receive swap; hold it the other way and you pay. Brokers add a markup to both sides, so the paid leg is usually worse than the received leg.
Wednesday rollover is normally charged at triple rate to cover the weekend. Swap-free Islamic accounts exist, though some brokers replace the charge with a fixed administration fee.
The mistake it causes: running a swing strategy on a pair with a heavily negative swap, where financing quietly outweighs the edge.
Where the number comes from
Swap is the interest-rate difference between the two currencies in a pair, adjusted by a broker markup. Hold the higher-yielding currency and you may receive; hold it the other way and you pay. The markup is applied to both sides, so the paid leg is usually worse than the received leg by a noticeable margin.
Wednesday is charged three times
Spot forex settles two business days forward, so the Wednesday rollover carries the weekend and is charged at triple rate. A trader holding a negative-swap position through Wednesday pays three days of financing in one night, which is a recurring surprise for people who only check the daily figure.
It decides whether a strategy is viable
| Holding period | Swap impact |
|---|
| Intraday, closed before rollover | None |
| Few days | Minor on majors, material on exotics |
| Weeks | Can exceed the spread entirely |
This is why HFM applying swap-free across all accounts is a genuine advantage for swing traders rather than a marketing line, and why it can outweigh a wider spread over a multi-day hold.
Swap-free accounts
Offered as Islamic accounts at most brokers on request, and as standard at some. Read the terms: several brokers replace swap with a fixed administration fee after a number of days, which can be worse than the swap it replaced on a long hold.
What to do with this
- Check the swap table for your pair and direction before holding overnight.
- Count Wednesday as three days when estimating cost.
- For multi-day positions, compare brokers on swap, not only on spread.
