What are "swap" and "rollover" charges in forex trading?
In forex trading, swap and rollover charges are fees charged by brokers for holding a position overnight.
A swap charge, also known as an overnight financing charge, is the interest paid or earned for holding a position overnight. This charge is calculated based on the interest rate differential between the two currencies being traded. If the interest rate on the currency being bought is higher than the interest rate on the currency being sold, the trader will earn a positive swap rate. Conversely, if the interest rate on the currency being sold is higher, the trader will pay a negative swap rate.
A rollover charge, also known as a rollover fee or a swap rate, is the charge for rolling over an open position from one day to the next. It is a combination of the interest rate differential and a broker's fee for providing the rollover service.
In essence, both swap and rollover charges are costs incurred for holding a position overnight, and traders need to be aware of them when making trading decisions. The charges vary depending on the broker and the currency pair being traded.
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forex trading, swap charges, rollover charges, interest rates, currency pairs, trading fees, forex brokers.
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