Swap is an interest fee that is either paid or charged to you at the end of each trading day. When trading on margin, you receive interest on your long positions, while paying interest on short positions. The net interest difference is known as the carry and traders seeking to profit from this are known as carry traders. Positive carry results when you receive more in interest than you are required to pay, and is added directly to your account.
If the carry is negative, it is subtracted from your account. If you open and close a trade within the same day, the trade has no interest implications. That is, if we wanted to perform a carry trade on EURAUD, we would wait until the pair was trending down, sell into any strength and hold for the length of the down trend.
Think of swap as an added bonus or incentive for holding a trade long term or in the case of negative swap, a deterrent. Are you looking to profit from the carry trade long term? Open a Vantage FX live account today. Overview Why trade Forex? When Can I Trade Forex? Forex Currency Pair Nicknames: Types of Forex Currency Pairs: Majors v Minors v Exotic v Currency Crosses. How Much is a Forex Pip Worth? ECN v Market Makers. Investing in over-the-counter derivatives carries significant risks and is not suitable for all investors.
Information provided is of a general nature only and does not take into account your objectives, personal circumstances or needs. ACN Rep No. Learn to Trade Forex.
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