Swap Rates
MonsTrade understands that competitive swap rates are important to any trader.
Get Competitive Forex Swap Rates
At MonsTrade we offer the most competitive exchange rates in the industry. This means that when you keep positions open overnight, you don't have to worry about the nightly/renewal fee affecting your earnings.
To find out the renewal fee, simply use the handy forex swap rates calculator in MetaTrader 5. All you have to do is select the financial instrument you intend to hold the overnight position, fill in the currency and transaction size details and click "Calculate."
The Monstrade all-in-one FX calculator allows you to calculate all the important parameters of your trading, including:
- Pip value
- Contract size
- Swap rate
- Margin and potential gain across all trading instruments.
Streamline your process and manage your strategies. Leave the manual calculations to us.
What You Need Know about Forex Swap Rates?
- Swap rates are applied at 00:00 platform time
- Swaps are applied each night on open positions only
- Swap rates are calculated in points and can be positive or negative depending on the interest rate difference of the two currencies
- Some forex pairs may have negative swap rates on both long and short positions
- Swap rates are calculated in points. MT5 convert these points automatically into your account currency
- The rates are triple the usual amount on Wednesday nights, to account for the weekend**
- Each forex pair has its own rollover fee, which is measured in the standard size of one lot or 100,000 units
What Are Forex Swap Rates?
Swap fees on Forex or renewal interest rates are the net interest yield a trader accumulates on a currency position held overnight. This fee is charged when the trader borrows money to purchase another currency as part of forex trading.
For example, if you are buying EUR/USD, you can borrow in US Dollars and buy Euros with that amount. In doing so, you will need to pay interest on the US Dollars you borrow and earn interest on the Euros you buy.
The net interest fee is calculated based on the difference in the interest rates of the two traded currencies. If the Forex swap rate calculation is positive, the trader wins, if it is negative, it is a cost to the trader.
Normally, the deposit and loan rates are different in the same currency. The loan rate is usually higher than the deposit rate. This is why forex swap rates differ for long and short positions in the same currency pair. The "storage" for holding a position overnight depends on several factors such as:
- The current interest rate differential between two currencies
- Currency pair price fluctuations
- Behaviour of the forward market
- Swap points of the counterparty
- Position of the liquidity provider in the market hierarchy
- Difference between forex swaps for long and short positions
How does a Forex Swap Work?
When traders enter into an agreement to buy or sell a currency, they undertake to make the final payments on the "value date". In the spot market, clearing takes place within two business days after the transaction. If the position remains open and is carried over to the next day, it means that the value date is moved one day ahead.
The corresponding currencies in trading are borrowed and loaned from the interbank market at current loan interest and deposit rates. Thus, the profits from lending and the cost of borrowing are transferred to the trader by his broker. Either the position is automatically reopened at a new value date adjusted according to the swap rate and a new price, or the position remains at the previous price while the swap is credited or debited to the trader's account.
Calculation of Forex Swap Rates
To calculate the forex rollover rates:
- Subtract the interest rate of the base currency from the interest rate of the quote currency
- Then, divide that amount by 365 times the base exchange rate
Let's say you are trading EUR/USD. Currently, the European Central Bank's (ECB) interest rate is 0.25% and the US Federal Reserve's interest rate is 1.75%. Let's say you want to trade EUR/USD, which means you buy Euros and sell USD.
Now, the interest rate of the currency you buy (EUR: 0.25%) is lower than the currency you sell (USD: 1.75%). Therefore, storage space will be deducted from your trading account. However, the broker will charge a fee or raise for overnight swaps.
Here:
Contract = 1 lot = €100,000
Price of EUR/USD = 1.1058
Interest rate differential = (1.75-0.25) = 1.5%
Markup = 0.25%(the broker's commission)
Days per year = 365
Swap = (100,000x(1.5+0.25)/100)x 1.1058/365 = $5.30
When your long position is rolled over to the next day, $5 will be deducted from your trading account.
Swap =
(Contract x (Interest Rate Differential + Markup) / 100) x Price / Days per year
You can also use a forex swap rollover calculator to estimate the value of your overnight trading positions. Simply select the instrument you are trading, your account currency and trade size, and the tool will calculate the rest for you.
Importance of Swap Charges in Forex
Swap calculations are made for positions that remain open after 17:00pm ET at the end of the day. It is important for long-term positions and traders using strategies beyond intraday fluctuations, including trend trading based on fundamental market changes, to carefully consider swap rates.
Forex swap fees are vital for traders using carry trading strategies. These strategies are based entirely on the interest rate difference between the two currencies, where the lower yielding currency becomes the funding currency (borrowed currency) and the borrowed amount is used to purchase a higher yielding currency.
The Swiss franc (CHF) has a negative spread with almost any currency, leading to negative swap rates for traders. Conversely, entering a short position can yield a positive trade-off overnight. Trading in GBP can result in positive swap rates against the euro, yen and Switzerland, while negative swaps with the US, Canadian and Australian dollars can be expected.
Forex swaps are also important for hedging purposes. A trader might open a second position in the opposite direction without closing the first, referring to this as "lock mode protection." Low variance between the rates provided by interbank clearing can help minimize the cost of holding such positions.
How to Find Monstrade Swap Rates in Own platform and MT5?
To check the latest rates on Own Platform and MT5 accounts:
Go to "Market" section- Right-click to select "Symbols"
- Choose the forex pair you want to trade
- Click on the "Properties" for the pair, (on MT5, please select 'Specification')
- All the information on the pair, such as forex swap rate, stop level, initial margin and more, will be displayed
The following rates will be applied at 5pm EST 31/12/2022
Swap rates are subject to change.
Live swap rates are available on the Own platform and MT5 platforms.
| Symbol | Long | Short |
|---|---|---|
| DAX | -5.00 | -2.50 |
| NASDAQ | -20.00 | -20.00 |
| GOLD | -5.00 | -2.50 |
| SILVER | -5.07 | -2.84 |
| BRENT | 2.35 | -7.46 |
| EURUSD | 3.71 | -10.50 |
| TESLA | -2.29 | -6.29 |