Trading and investing in Forex requires knowledge of certain terms and concepts. I have already written articles about, such as, and. In this article we will talk about what a currency swap is and its features. At the end of the article, I will share one simple investment idea, the profitability of which depends on the size of the swap and the current state of the market. At the moment, there are good prerequisites on the market for making money in this way, but first things first.

Swap in Forex - what is it?

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What is a “currency swap?” A Forex swap is a financial transaction that involves moving open positions overnight. A swap can be either positive (commission charged) or negative (commission written off). In the trading terminal, the swap is displayed in a separate column. Result closed deal in Forex it always consists of the sum of the values ​​in the “swap” and “profit” columns.

The concept of “swap” is most often encountered by those traders who work on medium- and long-term strategies. Swap is not charged for transactions within one day. The swap is determined by interest rates on loans from central banks for national currencies. Let's talk about this in a little more detail.

How Swap is formed for transactions

A swap in Forex is formed as follows:

1) Every weekday at 21:00 GMT (1 am Moscow time), open positions are recalculated, regardless of when exactly the transaction was opened. In other words, on weekdays at 21:00 all transactions are closed, and then they are reopened, taking into account changes in the exchange rate;

2) For each transaction there is a deposit currency (trader’s funds) and a loan currency (purchased currency); for a currency pair, a swap is calculated based on the current lending rates (in the Russian Federation called the refinancing rate) of national banks of the corresponding currencies. Below are the current rates on loans from the largest central banks.

Based on the interest rates given in the table, we can conclude that the minimum swap is charged for the most popular pairs (euro/dollar, pound/dollar, etc.), because These countries have the lowest interest rates.

Because Interest rates are calculated in annual terms, therefore, swaps must be calculated daily. However, the forex market does not work on weekends, so a triple swap is charged on the night from Wednesday to Thursday. This important feature should be taken into account when trading large volumes.

3) Despite the fact that most brokers say that they make money only on spreads (commission on the trader’s trading turnover, more on this in the following articles), the brokerage company’s commission is still included in the swap volume. This is partly why different brokers have different swap values.

Do trades have positive or negative swap?

Let's say we open a long position (buy), for example, on the pound/dollar pair. Essentially, we are buying pounds with dollars. Since we buy pounds, it means that we receive an interest rate and, accordingly, when we sell a dollar, we deduct the loan rate.

We perform the simplest action 0.5%-0.25%=0.25% and get a positive result, i.e., opening a long position on the gbp\usd pair, the swap will be positive. With the opposite opening, the calculation will look the other way around: 0.25-0.5=-0.25%, i.e., the swap will be negative.

Swap-free accounts

Swap (especially negative) is important to consider if you plan to keep open positions for more than 2-3 weeks, because... During this time, a number accumulates that can affect the outcome of the transaction. Therefore, if you plan to keep open trades for more than a month, then it is possible the best solution will pay attention to the so-called swap-free accounts.

Almost every broker now has swap-free accounts, because... Such accounts are in demand among a fairly large number of traders. In particular, recently closed PAMM accounts on Forex Trend were swap-free. It is difficult to imagine what amount would have accumulated as a swap throughout the trading life of the Galaxy account, if the average number of open transactions, according to my observations, was about 600. With this type, it is important to take into account the risks of a possible increase in the floating drawdown to the stop out level, at which transactions will be forcibly closed.

Brokerage companies usually compensate for the lack of swap on traders' trading accounts with additional commissions when opening transactions. Therefore, when opening such an account, you should compare trading conditions; perhaps a swap-free account will not be the most profitable for your trading strategy.

Currency swap - how much?

When choosing a broker, it is important to evaluate not only the credibility and reviews of the company, but also compare trading conditions and swap sizes for the pair most used. As an example, I will give the specification of Alpari contracts.

The swap size in the table is indicated in points and is calculated individually for each pair. Swaps for transactions opened for purchase (buy) are shown in the Long column, respectively, for sale (sell) Short. If there is a minus sign in front of the value, then the swap is negative. Already from this screen it is clear that the largest positive swap is accrued for the euro/ruble pair. On this note, I turn to the promised investment idea.

Investment idea

Recently, the ruble has been breaking through historical lows. The main drivers of inflation are falling oil prices, the difficult situation in Ukraine and economic sanctions of other states against Russia. According to experts, this situation cannot continue forever, which means the ruble quotes should roll back to at least 36 rubles. This theory is partly confirmed by technical analysis of the dollar/ruble pair quotes chart.

Actually, the investment idea is to wait and catch this pullback. Moreover, waiting for a rollback in this situation is no less profitable than catching it. By opening a sell deal on the usd\rub pair, we will receive a positive swap every day. I’ll break down the options depending on the size of the deposit.

The final profit was calculated using a calculator for traders from Alpari, based on current quotes (38.44374) and the spread (commission). It is better not to overestimate the lot size indicated in the table, because otherwise, the risks of not waiting for a reversal increase (the price can reach 39.5-40 rubles). A similar scheme can be used in the Euro/Ruble pair, in which the swap is even larger. Personally, I prefer the dollar pair, so I used it as an example.

I use a similar scheme from time to time, and it has proven to be effective. The last month, however, was not so successful, because... The dollar-ruble pair has grown significantly. Therefore, when using this scheme, it is still better to wait for the end of the uptrend. I will also remind those who want to apply my scheme about the risks. I just shared the method that I will use myself and cannot be held responsible for anyone else's results. Remember that there are no guarantees in Forex. If you want to try, but are not sure, go only for the minimum wage. Even if the scheme does not work (the dollar jumps 40 rubles), gain basic knowledge and trading experience.

For those who want to try this scheme, here are some instructions (for beginners):

1) Open a trading account (type standard.mt4). I trade through the broker Alpari (only in ruble pairs), because... it has the largest swaps for ruble pairs. By the way, many of my brokers do not support ruble pairs at all.

2) Top up your account with the required amount. I topped up with webmoney (commission 0.8%). Next, download the MetaTrader 4 trading terminal (you can download it in the trading platforms section).

4) In the “market overview” window, right-click to open the context menu and click on “Show all symbols”. Next, we find the usd/rub pair and also right-click to bring up the menu and click “New order”.

5) In the “Order” window that opens, enter the lot size (according to the table). You can also set a stop loss at the level of 39.5-40 rubles. Click the pink sell button.

6) In order to close a deal and fix a profit, at the very bottom of the terminal in the “Trade” tab, find an open deal and click on the cross in the “Profit” column.

Returning to swaps

In conclusion, I would like to say that swap is an integral part of trading on the Forex currency market. I hope that after reading this article, lazy investors will be one step closer to understanding trading processes on Forex. Continuing the topic of trading, I recommend that you read my review.

If you know interesting schemes for using swaps or simply have something to add to the article, write in the comments.

Profit to everyone!

You have probably noticed that if you leave any transaction open on your trading account, then the next day you will definitely find a slight change in the balance of your account in one direction or another, even if no trading operations were carried out during this period. The reason for the changes is swap (Forex swap) - a commission for transferring your open position to the next trading day.

But why does this happen if the Forex market is famous, first of all, for the possibility of trading at any time of the day? Despite the status of a free and independent market, Forex has certain rules that apply to all its players. According to exchange canons, at the end of the working day (trading session), settlements must be made in real money for all open positions between all trading participants. However, participants over-the-counter market Forex traders make money on the difference from the purchase and sale of currencies, using electronic terminals and means of communication, as a result of which they this process physically inaccessible. Therefore, instead of paying in cash for open positions on Forex, they are closed and re-opened when transferred to a new trading day, for which the specified commission is charged - swap.

Swaps trading

For traders, swaps do not pose a big problem; moreover, they have figured out how to make money on them. A strategy based on swaps is called Carry Trade. Its principle is to buy an instrument with a higher interest rate on the base currency of the pair than the quoted one, due to which you can make a profit (positive swap) when transferring an open position overnight.

But we should not forget that this strategy is quite risky due to the unpredictability of the behavior of the foreign exchange market. The risk is that the profit received on swaps for transferring a position may not cover the possible loss from the transaction itself if the purchase price of a currency pair is higher than its sale price. Therefore, if you decide to make money on swaps, do it only during those periods when market volatility is minimal.

One of the types of commissions that a trader pays when opening transactions on the Forex currency market is swap. What it is and how to recognize it, as well as its varieties, we will consider in this post.

Swap– this is the exchange commission for transferring an open position to the next trading day. It is formed based on the difference in interest rates in countries whose currencies are included in the traded pair.

At the same time, depending on the result of the difference in refinancing rates, the swap can be either positive or negative. To understand why such a swap is used when buying or selling currency pairs, it is necessary to consider the mechanism of its formation.

So, the commission is calculated based on the main interest rate of the Central Bank. So, at the moment, the main currencies have the following values:

• US Federal Reserve (USD) – 0.75%;
• European Central Bank (EUR) – 0.00%;
• Bank of England (GBP) – 0.50%;
• Bank of Canada (CAD) – 1.25%;
• Swiss National Bank (CHF) – -0.75%;
• Bank of Japan (JPY) – -0.10%;
• Reserve Bank of Australia (RBA) (AUD) – 1.50%;
• Reserve Bank of New Zealand (RBNZ) (NZD) – 1.75%.

Currencies of countries with high interest rates are called high-yielding, since the cost of money in the state is high relative to others, and those where the Central Bank rate is low are called low-yielding.

The swap is calculated as follows: when buying a pair, the interest rate of the regulator of the quoted currency (the one in second place) is subtracted from the interest rate on the main currency (the one in first place). If the first is higher than the second, then the swap will be positive, if lower - negative.

When selling a pair, we calculate in the reverse order: subtract the rate of the base currency from the refinancing rate of the quoted currency. So, when buying GBP/USD, our swap will be 0.50% – 0.75% = -0.25%, and when selling 0.75% – 0.50% = +0.25% of the quote.

Why is there a need to accrue or write off swaps?

First, Forex trading involves speculation rather than taking delivery of currency. Secondly, when we buy currency, we pay a credit interest rate on it, and when we sell currency, our money can be used to issue loans, and therefore the interest rate is paid to us.

It is worth noting that from Wednesday to Thursday a triple swap is withdrawn or added, compensating for commissions for the weekend, when financial markets and institutions are closed.

How to use swaps in trading

If you are trading Forex, holding a position for the medium term, it is important to understand how the amount of swaps will affect the outcome of the transaction. If the profit potential for an open position is small and the maturity period is long, it is important to take into account that negative swaps do not offset the profit. However, if the swap on an open position on a particular currency pair is positive, this can become an additional source of income.

Using positive swaps, a trading tactic called carry trade was also developed, which is essentially making a profit from the difference in interest rates. It consists in opening transactions on such currency pairs and in such a direction that when opening a position, a high-yielding currency (with a high interest rate) is purchased for a low-yield currency (with a low interest rate).

For example, this could be buying AUD/JPY, CAD/JPY, NZD/CHF, NZD/JPY, AUD/CHF or selling EUR/NZD, EUR/CAD. Having opened a trade in this way, a positive swap will be credited to the trader’s account for transferring the open position overnight. This will be the income from the carry trade.

However, when using this strategy, as in the case of negative swaps, it is worth considering financial result from price changes for the selected pair. If the price goes against the open position, the minus from the price difference will eliminate the money earned on the swap. Therefore, it is worth choosing entry points at which income can be obtained both from price changes and from the accrual of the swap.

Swap– a trade and financial transaction that involves the exchange of different assets and combines the purchase (sale) and reverse operation (sale or purchase, respectively) of the same asset. In this case, the operation is not performed immediately, but after some time, subject to the same or other conditions.

In Forex, the term swap refers to the fee that is charged for transferring an open position to the next day. Swap is also called rollover or overnight.

What types of swaps are there?

There are several types of swaps:

• swap to extend the validity of securities;
• currency swap (purchase foreign currency with immediate payment in national currency and subsequent sale of the purchased currency);
• swap with gold;
• swap with interest;
• swap with debt claims, etc.

All types of swap can be combined in one transaction. The execution date close to the trade is value date, more distant - the end date of the swap.

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