🌙 How Are Swap and Overnight Carrying Costs Calculated?

When you do not close a position opened in the evening hours and roll it over to the next day, you may have noticed small balance updates in your account called "swap". This situation, which occurs after the end-of-day closing time, stems from interest rate differentials between the asset pair you trade and market carrying conditions. Understanding the logic behind overnight carrying costs can help you manage your positions much more consciously.

⚠️ What is Swap? Swap is the reflection of the difference between the overnight interest rates of two different currencies in a currency pair onto your account. When a position passes the end-of-day rollover time, the trade is carried over to the next trading day, and a positive or negative cost is reflected in your account during this rollover.

🧠 Why Does It Occur? 🟠 Interest Rate Differentials: If the interest rate of the currency you buy is higher than the currency you sell, a positive swap may occur; if lower, a negative swap may occur. 🟠 Market Liquidity: Carrying costs may vary not only based on interest rates but also according to market liquidity and the cost structures of providers. 🟠 Weekend Effect: On Wednesdays, a 3-day swap is generally applied to positions in order to cover the weekend value date.

🔢 How Does the Calculation Logic Work? When determining overnight carrying costs, the following basic variables are taken into account: 1️⃣ Lot Size: As your position volume increases, the reflected overnight carrying amount also changes proportionally. 2️⃣ Point Value: The monetary value of a unit point is calculated according to the contract size of the symbol. 3️⃣ Number of Carrying Days: The number of nights the position remains open is multiplied by the swap rate of the relevant day and reflected in your balance.

💡 Practical Tip: When planning medium- and long-term trades, checking the buy and sell swap values of the relevant product in the "Contract Specifications" section of your trading platform can facilitate your financial planning.

🎯 Summary: Overnight carrying cost (swap) is a routine adjustment applied to the balance based on interest and market conditions of carried positions.

Examining cost structures before carrying your positions contributes to establishing your risk management strategy on firmer ground.

This content is educational and informational, not investment advice. FXPARTNER is not a broker and does not provide investment services.