What Is Swap in Forex? Rollover and Overnight Fees Explained
Forex swap explained: why holding a trade past the daily rollover costs or pays you, how triple Wednesday works and how to turn swap points into money.
You hold a trade for a fortnight, it hits your target, and the result is still a little short of what the pips said it should be. Somewhere in the trade history is a column called swap, and it has been quietly charging you every night.
Quick answer: A forex swap, also called rollover, is the interest your broker charges or pays on any position still open at the daily rollover, 5 p.m. New York time. It reflects the interest rate gap between the two currencies, minus a broker markup, so it can be positive or negative, and is usually charged three times on Wednesdays.
What is swap in forex?
A swap is overnight interest on an open currency position. You will see it called rollover, overnight fee, overnight financing or tom-next, depending on the broker. They all mean the same thing: a small credit or debit applied to every position that is still open when the trading day rolls over.
It exists because a currency pair is really two currencies. When you buy EUR/USD, you are in effect holding euros and borrowing the dollars you paid for them. Both currencies earn interest, set mainly by their central banks, and the two rates are almost never the same. Hold the position overnight and you should earn interest on the currency you hold and pay interest on the one you borrowed. The swap is the net of the two, adjusted by your broker.
There is also a plumbing reason. In the interbank market, a spot currency deal settles two business days after it is agreed. Retail positions never settle: they are rolled forward one day at a time, and each roll is done at a price that reflects the interest gap between the two currencies. That roll is the rollover, and your swap is the retail version of it.
Three practical facts follow from this.
Swap is charged at one moment, not by the hour. The rollover happens at 5 p.m. New York time, which is 10 p.m. in London for most of the year. A trade opened in the morning and closed before then pays nothing, however long it was open. A trade opened five minutes before rollover and closed five minutes after pays a full night.
It applies to every pair and every position size. It is quoted per lot and scales exactly with your lot size, so a tenth of a lot pays a tenth of the swap.
It accumulates quietly. On most platforms, the swap builds up in its own column on the open position and is added to the result when you close. Some brokers book it to your balance each day instead. Either way, it is real money.
The clock below shows the four main sessions in your own time zone. The rollover sits at the hand-off where New York winds down and Sydney takes over, which is also the quietest, most thinly traded part of the day.
Open now: …
The four forex sessions in your local time. The daily rollover, when swap is charged, falls at the New York close, just as the Sydney session begins. Spreads are usually at their widest around it.
Our guide to forex market hours explains why the rollover hour is so thin, and the Academy lesson on market sessions covers the daily cycle.
Where forex swap rates come from
Every swap starts with a central bank. The Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan each set a policy interest rate, and short-term market rates in each currency follow it closely. The gap between two of those rates, the interest rate differential, is what a currency pair’s swap is built on.
In the interbank market, banks roll positions forward using a short-term deal called a tom-next swap (tomorrow to the next day), priced from that differential. Your broker takes the interbank figure, or a benchmark close to it, and adds its own markup. The rough formula for one night is:
Swap per night ≈ position value × (rate on the currency you hold − rate on the currency you owe − markup) ÷ 365
Some brokers divide by 360 for certain currencies, which makes a small difference. Use the formula to sanity-check what your platform shows, not to predict it to the cent.
Take the position from the diagram above: 0.5 lots of EUR/USD at 1.0800, worth $54,000. With an illustrative euro rate of 2.0% and dollar rate of 4.0%, the differential alone costs $54,000 × 2.0% ÷ 365, about $2.96 a night. Add a 0.5% markup and the charge becomes $54,000 × 2.5% ÷ 365, about $3.70 a night. Reverse the trade and sell, and you hold the dollars: you earn the 2.0% gap minus the 0.5% markup, 1.5% a year, or about $2.22 a night.
Because the swap follows interest rates, it is not a fixed fee. It moves when a central bank changes its rate, and often before, as markets price in an expected change. A hike in one currency widens the gap against currencies whose rates stayed put. Step through the chain below to see how a rate decision reaches the exchange rate itself.
How a rate decision reaches the currency. The same change in the rate gap also resets the swap on every pair that trades that currency, usually within days.
The chain matters twice for a swap. The new rate changes the nightly credit or charge directly, and the move in the exchange rate it causes is usually far larger than any swap. Our guides to how interest rates affect currency prices and central banks in forex go into the decisions themselves, and the Academy lesson on central banks shows how to read them.
Long vs short: why swap is positive one way and negative the other
Which way your swap goes depends on which currency you hold. Buying a pair means holding the base currency and owing the quote currency. Selling the pair means the opposite: holding the quote currency and owing the base. If you are not sure which is which, our guide to long vs short in forex walks through it.
From there the rule is short:
- Hold the higher-yielding currency and you earn the differential, minus the markup.
- Hold the lower-yielding currency and you pay the differential, plus the markup.
The markup is taken from both sides. That is why swap is lopsided: the credit for being on the right side is always smaller than the charge for being on the wrong side. And when the gap between two rates is smaller than the markup, there is no right side. Both directions pay.
So a positive swap is possible, but only when you hold the higher-yielding currency and the rate gap is wide enough to clear the markup. Pairs that combine a high-rate currency with a low-rate one tend to show a credit on one side; pairs of two currencies with similar rates often show a charge on both.
Earning a positive swap on purpose is the idea behind the carry trade: hold the high-yielder, collect the interest each night. It is not free money. A position paying $4 a night collects about $120 in a month, and an ordinary bad day in the exchange rate can take that back in a few hours. When markets get frightened, carry positions tend to be closed all at once, and the moves can be violent. Our guide to the carry trade explained covers how it builds and how it unwinds. Leverage magnifies losses as well as gains, and a positive swap does nothing to change that.
Triple swap Wednesday and the rollover calendar
Wednesday’s charge is three times the usual size because it covers the weekend.
Remember that spot currency deals settle two business days after they are agreed. Each rollover moves a position’s settlement (or value) date forward. Most nights it moves one day. But a position rolled on Wednesday night would have settled on Friday, and the next business day after Friday is Monday. Its value date jumps across Saturday and Sunday, so that one rollover carries three nights of interest.
A few consequences are worth knowing:
- Holding over the weekend is not free, and it is not extra. You pay for Saturday and Sunday either way; the bill just arrives on Wednesday. A week of holding costs seven nights, whichever days you hold.
- Opening on Wednesday afternoon is expensive. A trade opened an hour before Wednesday’s rollover pays three nights on its first night.
- Positive swap is tripled too. If you are on the earning side, Wednesday credits three nights.
- Holidays move the extra nights. When a bank holiday closes settlement in either currency, the value date skips that day as well, so an extra night can be charged on a different weekday that week.
- Not every instrument uses Wednesday. Some brokers apply the triple charge on Friday for certain products, often non-currency instruments such as indices or commodities. The contract specification on your platform shows the day.
Some traders close positions before Wednesday’s rollover and reopen them after it to dodge the triple charge. It works on paper, but it means paying the spread again at the moment it is usually widest, and being out of the market while it happens. On a small position the spread can easily cost more than the swap saved. The hub lesson on the real cost of trading shows how spread and swap add up together.
Reading swap rates: points, money and percent
Your platform shows a swap long and a swap short for every pair, usually in the symbol’s specification window (on MetaTrader, right-click the symbol and open its specification). It also shows a swap type, which tells you what the numbers mean. Two figures of −7.4 can be very different amounts depending on the type.
| Swap type shown | What the number means | Turning it into money per night |
|---|---|---|
| Points | Price points per lot per night | points × point value per lot × lots |
| Money | Account currency per lot per night | figure × lots |
| Percent | Annual interest rate on the position value | value × rate ÷ 365 (or 360) |
The points type is the most common, and the one that confuses people. A point is the smallest price step on the quote: 0.00001 on EUR/USD, or 0.001 on USD/JPY. Ten points make one pip. On one standard lot of EUR/USD, a point is worth $1. On one lot of USD/JPY, a point is worth ¥100, which is about $0.67 with the rate at 150. If those values are unfamiliar, the lesson on pips and lots and our guide to pip value by currency pair explain them.
The EUR/USD row matches the formula from earlier: −7.40 points × $1 × 0.5 lots is −$3.70 a night, the same as $54,000 × 2.5% ÷ 365. When you can make the two methods agree, you know you are reading the platform correctly.
Swap on JPY pairs
Yen pairs deserve their own note, for three reasons.
First, the numbers look big. Because a point on a yen pair is worth less than a point on EUR/USD, the same amount of interest shows as more points. A swap of +12.33 points on USD/JPY is about $8.22 a night per lot, not $12.33.
Second, the swap arrives in yen. It is calculated in the quote currency and then converted to your account currency at the current rate. If USD/JPY falls from 150 to 140, the same ¥616 is worth about $4.40 rather than $4.11.
Third, the gaps have often been wide. Japanese rates have sat at or near zero for most of the past 25 years, and were below zero from 2016 to 2024. That made long positions in pairs such as USD/JPY, GBP/JPY and AUD/JPY a common source of positive swap whenever the other currency’s rate was well above the markup, and short positions in them correspondingly expensive. Rates change, so treat this as history rather than a forecast, and check the figures on your platform. Our USD/JPY trading guide explains what happens to those positions when markets turn fearful.
How forex swap affects swing trades held for weeks
For a day trader who closes before the rollover, swap does not exist. For a swing or position trader, it can be one of the largest costs on the trade, because it is the only one that grows the longer you hold.
Measure swap in pips, the same unit as your stop and target. On 0.5 lots of EUR/USD each pip is worth $5, so the illustrative $3.70 nightly charge is 0.74 pips. That is nothing on one night. The figure below shows what it becomes over the holding periods swing traders use.
Negative swap also moves your break-even price. Every night of negative swap means the price must travel a little further in your favour before the trade is ahead. Step through the swing trade below to watch it happen.
A swing trade on EUR/USD daily candles, held for ten nights at an illustrative −$3.70 a night on 0.5 lots. The swap pushes the break-even price 7.4 pips above the entry and shrinks the trade's reward-to-risk.
Reward-to-risk of 80 to 40 needs a win rate of 33% to break even. After ten nights of swap, 72.6 to 47.4 needs about 40% (47.4 ÷ 120). Nothing about the chart changed; only the time did. Our guide to the risk-reward ratio and the lesson on risk and reward explain the break-even win rate in full.
To total swap with the rest of a trade’s costs, use the calculator below. It is set to the same trade: 0.5 lots, a 1-pip spread, no commission, and a swap of $7.40 per lot per night held for ten nights. The spread costs $5; the swap costs $37.
Spread = pips × $10 × lots. Commission and swap are quoted per lot. A trade must earn more than the total before it makes anything.
Change the nights to 20 or 40 and notice how the swap segment swallows the bar. The spread is paid once; the swap is paid for as long as you hold.
Swap-free accounts and other ways to manage swap
A swap-free account, often called an Islamic account, is offered to traders who cannot pay or receive interest for religious reasons. No swap is charged or credited. The financing cost does not disappear, though. Brokers usually recover it in one of three ways: a wider spread, a fixed administration fee per lot after a set number of nights, or a commission. Many brokers also restrict these accounts to clients with a religious need, and some limit how long positions can be held. Our guide to Islamic (swap-free) forex accounts compares the models, and the lesson on account types shows where they fit among the alternatives.
For everyone else, managing swap is a matter of habit rather than tricks:
- Read both swap figures before you enter. It takes ten seconds in the symbol specification, and it tells you whether holding will cost or pay, and roughly how much.
- Convert swap to pips and put it in the plan. If you expect to hold for two weeks, add the swap in pips to your stop and subtract it from your target before you judge the trade.
- Match the holding period to the pair. Very long holds in a direction with a heavy negative swap need a correspondingly large expected move to be worthwhile.
- Never choose a direction for the swap. The exchange rate decides the result; the swap only adjusts it.
- Re-check after central bank meetings. A rate change can turn a credit into a charge within days.
Our broader guide to forex trading costs puts swap alongside the spread, commission, slippage and account fees, and shows how to total them over a month.
Common mistakes with forex swap
Discovering swap after the trade
The most common mistake is not knowing the swap until it appears in the history. A long hold in the expensive direction can turn a winning idea into a break-even result, as the hub lesson’s example shows. Check the swap before entry, not after exit.
Choosing a trade for its positive swap
A positive swap feels like being paid to wait. In practice, a few dollars a night is tiny against normal daily price moves, and the pairs that pay the most can fall hardest when carry trades unwind. Size every position from your stop, never from the carry you hope to collect.
Opening just before Wednesday’s rollover
A trade opened at 9.50 p.m. London time on a Wednesday pays three nights within ten minutes, often at the widest spread of the day. Unless the setup demands it, wait.
Treating today’s swap rate as fixed
Swaps follow interest rates, and rates move. A position opened when the swap was positive can end up paying it after one central bank decision. Re-check the figures on long holds, especially around rate announcements.
Reading points as money
A swap of −16.44 on USD/JPY is not $16.44. Check the swap type in the specification, then convert it with the point value and your lot size.
Frequently asked questions
What is swap in forex trading?
Swap is the interest your broker charges or credits on a position that is still open at the daily rollover, 5 p.m. New York time. It comes from the difference between the two currencies' interest rates, adjusted by a broker markup. It is also called rollover, overnight fee or overnight financing.
Why is my swap negative on both buy and sell?
Because the broker's markup is larger than the interest rate gap between the two currencies. The markup is taken from both directions, so when the two rates are close together, the credit for holding the higher-yielding currency is wiped out and both sides pay. This is common on pairs of currencies with similar rates.
What time is swap charged in forex?
At the daily rollover, 5 p.m. New York time, which is 10 p.m. in London for most of the year. Only positions open at that moment are charged or credited. A trade opened and closed earlier in the day pays no swap, however long it was open.
Why is swap tripled on Wednesday?
Spot currency deals settle two business days later. Rolling a position on Wednesday moves its settlement from Friday to Monday, across the weekend, so Wednesday's rollover carries three nights of interest. Some instruments and brokers use a different day, and holidays can move extra nights, so check the contract specification.
How do I calculate swap in forex?
Find the swap long and swap short in the symbol specification and check the swap type. For a swap in points, multiply the points by the value of one point on one lot and by your lot size. As a cross-check, position value times the rate gap plus markup, divided by 365, gives a similar figure.
Do swap-free accounts really have no fees?
They have no swap, but the broker still recovers the cost of financing positions. Usually that means a wider spread, a fixed administration fee after a set number of nights, or a commission. Compare the total cost of holding for your usual number of nights, not just the absence of swap.
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