At the end of each trading day, positions held in your account may be subject to a charge called “swap”. A swap means the difference between the interest rates of the currencies in a currency pair you are buying or selling. When you buy one currency, you are selling another currency. Each currency has an interest rate. The cost can be positive or negative, depending on the direction of your trade and the applicable rate. The swap is charged automatically and is converted into the currency that the account is denominated in.
The swap is calculated and charged once every weekday for 1 day rollover, with the exception of Wednesday, when it is calculated and charged 3 times to the account for the weekend.
Swaps are calculated and applied to your account automatically every day at 4:58 AM in Singapore Time (5:58 AM in winter time). You will earn/pay swaps for positions held before that point of time.
The cost or income is calculated as the interest rate differential between Tomorrow Next Deposit Rates (TNDR) of the 2 currencies, plus the markup charged by the Company on which the position is held and depending on the type of position (Long / Short). Clients may either gain or lose on swap, thereby having either positive or negative rollover, respectively. It is possible that some instruments may have negative rollover values on both sides as a result of commission being added on top of the overnight interest rate differential of the two currencies.
The swap rate is indicative, and the actual swap incurred shall be determined by what is shown in your account.
For the convenience of calculation, Swap Points are generally used to calculate swap, the formula is as follows.
Swap = Position Size * Contract Multiplier * Pip/10 * Swap Point * Number of Days
*Pip: The unit of measurement to express the change in value between two currencies is called a “pip.” For example, for EUR/USD, it is 0.0001, and for USD/JPY, it is 0.01
If you hold a long position in 0.1 lot of EUR/USD overnight, the swap point is -3.91 points/lot, and the swap is calculated for 1 day (the position is not closed on Wednesday, counting as 1 day):
Swap = 0.1 lot * 100,000 * 0.0001 /10 * (-3.91 point) * 1 = -0.39 USD
You will need to pay swap of 0.39 USD.
If you hold a Long position of 0.5 lots USD/JPY overnight, the swap point is 9.93 points/lot, and the swap is calculated for 3 days (the position is held at the market close on Wednesday, counting as 3 days):
- Swap (JPY) = 0.5 lot * 100,000 * 0.01 /10 * (9.93 point) * 3 = 1,490 JPY
- Calculate the exchange rate from JPY to USD based on the USD/JPY price when the swap is calculated (assuming USD/JPY=147.47)
- Swap = 1,490 JPY / 147.47 = 10.10 USD
Therefore, when the Long position of USD/JPY is held overnight, the swap of 10.10 USD can be obtained.