Overnight Swap

The overnight swap is an interest charge (or credit) applied to positions held past the daily rollover time, which is typically 5:00 PM New York time. The swap reflects the interest rate differential between the two currencies in your pair. If you're long a currency with a higher interest rate than the one you're short, you receive a positive swap. Otherwise, you pay.

Swap rates are set by your broker and can vary significantly between brokers. They're usually quoted in points or in the account currency per lot. Wednesday night carries a "triple swap" to account for the settlement over the weekend (even though you hold the position through three calendar days, the market is open for one trading day).

For short-term traders (day traders and scalpers), swaps are mostly irrelevant since positions close before rollover. For swing traders and position traders, swap costs can accumulate and eat into profits. Some traders specifically seek out positive-swap pairs as part of carry trade strategies, aiming to profit from the interest differential over time.