A swap rate refers to the overnight interest that is either added to or deducted from your position when it’s held open overnight. Swaps come in two forms: a swap long for buy positions and a swap short for sell positions. These rates are determined by the overnight interest rate differential between the two currencies in the pair and whether your position is a buy or sell.
It’s important to note that swaps are only applied when positions are maintained overnight until the next forex trading day. Each currency pair has its specific swap charge and swap rates provided as per central bank, calculated based on a standard size of 1.0 lots, equivalent to 100,000 base units.
On Wednesday nights, swaps for FX, Metals, Bonds, and CFDs on Commodities are subject to a triple rate compared to the usual rate. Similarly, on Friday nights, swaps for Energies, Indices, and also incur a triple rate compared to the standard rate.
