Swap – Austin Pips

Forex Swap Rates

At Austin Pips, we understand that competitive swap rates are crucial for every trader.

Get Competitive Forex Swap Rates

At Austin Pips, we offer some of the most competitive swap rates in the industry. This means you won’t have to worry about overnight/rollover fees eating into your profits when holding positions overnight.

To check your rollover fee, simply use the forex swap rates calculator on Austin Pips. Select the financial instrument, input your currency and trade size, and click “Calculate.”

All-in-One FX Calculator at Austin Pips

Austin Pips offers an all-in-one FX calculator to help you easily calculate key parameters of your trades, including:

Pip value
Contract size
Swap rate
Margin and potential gain

Streamline your trading process and manage your strategies effortlessly. Let us handle the calculations for you.

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What You Should Know About Forex Swap Rates at Austin Pips

Swap rates are applied at 00:00 platform time
Swaps are applied each night on open positions only
Swap rates are calculated in points and can be either positive or negative based on the interest rate difference between the two currencies
Some forex pairs may have negative swap rates for both long and short positions
Swap rates are calculated in points, and Austin Pips automatically convert these into your account currency
Swap rates are triple the usual amount on Wednesday nights to account for the weekend
Each forex pair has its own rollover fee, measured in the standard size of one lot (100,000 units)
Please note, some instruments may have triple swaps on Friday. Check platform specifications for your chosen instrument.

What Are Forex Swap Rates ?

Swap charges, or rollover interest rates, are the net interest a trader accumulates when holding a currency position overnight. This fee arises when a trader borrows one currency to buy another.

For example, if you’re buying EUR/USD, you might borrow US Dollars to buy Euros. In this case, you’ll pay interest on the borrowed US Dollars and earn interest on the Euros you’ve purchased.

The net interest fee depends on the difference in interest rates between the two currencies. If the swap rate is positive, the trader benefits, but if it’s negative, it becomes a cost.

Deposit and credit rates on the same currency typically differ, with credit rates often higher than deposit rates. This is why forex swap rates for long and short positions on the same currency pair can vary.

The “storage” cost of holding a position overnight depends on several factors, including:

The current interest rate differential between the two currencies
Currency pair price fluctuations
Behavior of the forward market
Swap points from the counterparty
Position of the liquidity provider in the market hierarchy
Difference in forex swaps for long and short positions

All-in-One FX Calculator at Austin Pips

When traders enter a position to buy or sell a currency, they commit to finalizing the transaction on the “value date,” typically within two working days in the spot market. If the position is held overnight, the value date is rolled over to the next day.

The corresponding amounts of currencies involved in the trade are borrowed and lent from the interbank market at the current credit and deposit rates. The broker transfers the gains from lending and the cost of borrowing to the trader.

The position is either automatically reopened with a new value date, adjusted for the swap rate and a new price, or the swap is credited or debited to the trader’s account, while the original position price remains unchanged.

Calculation of Forex Swap Rates

To calculate the forex rollover rates:

Subtract the interest rate of the base currency from the interest rate of the quote currency

Then, divide that amount by 365 times the base exchange rate

Suppose you’re trading EUR/USD, where the European Central Bank (ECB) interest rate is 0.25% and the US Federal Reserve (Fed) interest rate is 1.75%. If you decide to go long on EUR/USD, you’re buying Euros and selling US Dollars.

In this scenario, the interest rate on the currency you’re buying (EUR: 0.25%) is lower than the one you’re selling (USD: 1.75%). As a result, a storage fee will be deducted from your trading account. Additionally, the broker may charge a fee or mark-up for the overnight swap.

When your long position on EUR/USD is rolled over to the next day, a fee of $5.30 will be deducted from your trading account. This deduction reflects the interest rate differential between the currencies involved in the trade.

Importance of Swap Charges in Forex

At Austin Pips, swap calculations are made at the end of the day for positions that remain open after 5:00 PM ET. This is particularly important for traders planning to hold long-term positions. Those using strategies that consider both intraday price fluctuations and longer-term trends based on fundamental market shifts need to carefully account for swap rates.

Forex swap charges are also crucial for traders employing carry trade strategies, where the goal is to take advantage of the interest rate differential between two currencies. The currency with the lower yield is used as the funding currency (borrowed currency), which is then used to purchase a higher-yielding currency.

For example, the Swiss franc (CHF) typically has a negative swap rate with most other currencies. This means that if a trader goes long on the Swiss franc, they can expect to incur negative swap rates overnight. However, going short on the CHF may result in a positive swap. In contrast, going long on the British pound (GBP) can yield positive swap rates against the euro (EUR), Japanese yen (JPY), and Swiss franc (CHF), but a negative swap may occur when paired with the US dollar (USD), Canadian dollar (CAD), or Australian dollar (AUD).

Forex swaps also play a key role in hedging strategies. Traders who expect a specific market movement that hasn’t yet occurred may opt to open a position in the opposite direction, without closing the initial one. This strategy, known as “lock mode hedging,” can benefit from the low spreads offered by interbank swaps, helping to reduce the cost of maintaining these positions.