Why do they charge triple swap rate on Wednesday? | Forex Factory

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Why do they charge triple swap rate on Wednesday?

  • #1
  • First Post: Aug 11, 2016 12:59am Aug 11, 2016 12:59am
I just noticed that Pepperstone and Thinkforex (now Thinkmarket) charge their clients triple swap rate on Wednesdays for weekend clearance thingy. When asked what happen if I close the trades on next day, i.e. Thursday, will they return the extra 2 days swap back to me? The answer is a miserable 'NO'.
Can someone please enlighten me whether this is industry wise practice or just some cunning brokers finding a way to squeeze more juice from their clients unnoticed?
Focused Thought & Strong Desire Manifest Reality
  • #2
  • Aug 11, 2016 2:33am Aug 11, 2016 2:33am
Quoting Apom
I just noticed that Pepperstone and Thinkforex (now Thinkmarket) charge their clients triple swap rate on Wednesdays for weekend clearance thingy. When asked what happen if I close the trades on next day, i.e. Thursday, will they return the extra 2 days swap back to me? The answer is a miserable 'NO'. Can someone please enlighten me whether this is industry wise practice or just some cunning brokers finding a way to squeeze more juice from their clients unnoticed?
All brokers do that. The reason they give out is because it takes 2 days for forex transactions to settle. So if you held a position open after 5:00 PM EST on Wednesday, it won't settle until after Friday and then to cover the weekend, they tag on two extra days of swap. So unless you have a positive carry, DON'T ever leave your positions open after Wednesday UNLESS you know for sure the potential profit you can make is going to completely overcompensate the swap.
Make your losses in demo. Earn your profits live.
  • #3
  • Aug 11, 2016 3:18am Aug 11, 2016 3:18am
Quoting Forexia
{quote} All brokers do that. The reason they give out is because it takes 2 days for forex transactions to settle. So if you held a position open after 5:00 PM EST on Wednesday, it won't settle until after Friday and then to cover the weekend, they tag on two extra days of swap. So unless you have a positive carry, DON'T ever leave your positions open after Wednesday UNLESS you know for sure the potential profit you can make is going to completely overcompensate the swap.
thanks for clarifying
Focused Thought & Strong Desire Manifest Reality
  • #4
  • Aug 11, 2016 2:32pm Aug 11, 2016 2:32pm
Quoting Apom
When asked what happen if I close the trades on next day, i.e. Thursday, will they return the extra 2 days swap back to me? The answer is a miserable 'NO'.
Hi Apom,

Keep in mind it works both ways. If you are long the currency in the pair with the higher interest rate (for example if you are long TRY/JPY or short USD/ZAR), then you earn the swap instead of paying it. The strategy of holding a trade open to earn the swap is called carry trading, and we recently had a discussion about this.

The swap rate (AKA rollover interest) is applied to any trades open at 5pm New York Time, regardless of how long the trades have been open. That means, if you buy TRY/JPY at 4:59 PM and close your trade at 5:01 PM on Wednesday, you can earn the full 3 days' worth of rollover interest, even though your trade was open only 2 minutes.

On the flip side, if you are a day trader who doesn't want to worry about swap, then you can buy USD/ZAR at 5:01 PM Tuesday and close your trade at 4:59 PM on Wednesday and pay no rollover interest, even though your trade was open for 23 hours and 58 minutes.

Another thing to keep in mind is how holidays affect the normal swap schedule. If there is a 3 day weekend coming up, then you may earn or pay 4 days' worth of interest or more for trades open at 5pm on Wednesday.
  • #5
  • Aug 13, 2016 6:38pm Aug 13, 2016 6:38pm
Quoting Jason Rogers
{quote} Hi Apom, Keep in mind it works both ways. If you are long the currency in the pair with the higher interest rate (for example if you are long TRY/JPY or short USD/ZAR), then you earn the swap instead of paying it. The strategy of holding a trade open to earn the swap is called carry trading, and we recently had a discussion about this. The swap rate (AKA rollover interest) is applied to any trades open at 5pm New York Time, regardless of how long the trades have been open....
So I believe the swap only applies to the pair that has holiday on Monday? those exotic pair imposes too much spread that short term carry trade is not profitable. On the other hand, major pairs normally have negative swap for both buy and sell trades...
Focused Thought & Strong Desire Manifest Reality
  • #6
  • Aug 14, 2016 4:48am Aug 14, 2016 4:48am
I'm new to the currency markets and was wondering if someone here could give me a basic and simple explanation of what swap is. It would be greatly appreciated and beneficial for me too understand. Thank you too anyone who is willing to provide a response!
  • #7
  • Aug 15, 2016 9:06pm Aug 15, 2016 9:06pm
Quoting Subliminal
I'm new to the currency markets and was wondering if someone here could give me a basic and simple explanation of what swap is. It would be greatly appreciated and beneficial for me too understand. Thank you too anyone who is willing to provide a response!
Due to leverage, you actually borrow money to trade in FX, i.e. you need to pay interest if you hold it overnight, the interest is called swap. E.g. if you buy EURUSD, you actually borrow USD to buy EUR, to put in the simplest form, swap rate=EUR interest rate - USD interest rate; to sell it will be in the other way round (swap rate=USD interest rate - EUR interest rate).
But in reality different broker charge different interest rate even though it's the same currency pair.
Focused Thought & Strong Desire Manifest Reality
  • #8
  • Aug 15, 2016 10:37pm Aug 15, 2016 10:37pm
Actually you need to avoid carry a position overnight NOT just on Wednesday but any days STARTING Wednesday that includes Thursday AND Friday. Basically any period where the position will settle over a weekend, you will be charged higher swaps. So at the end, it's just Monday and Tuesday that you get charged only 2 days of swap if you carry an overnight position. And of course if the next Monday is a holiday then it's even worse, then you will be charged FIVE days of interest if it's a negative carry.
Make your losses in demo. Earn your profits live.
  • #9
  • Aug 16, 2016 5:21am Aug 16, 2016 5:21am
triple swap is meant to cover for weekends..

my broker charges it on Friday midnight after close

brokers who triple charge on wednesday are being cheeky
practising coitus interruptus
  • #10
  • Aug 18, 2016 1:15pm Aug 18, 2016 1:15pm
Quoting avibe
brokers who triple charge on wednesday are being cheeky
That's not the case, Avibe

Forex brokers apply (it's not always a charge, since you can also earn) triple rollover interest on Wednesday, because that's how it's applied by the banks providing liquidity to the FX market. This is because spot forex trades have a 2-day settlement period. A spot FX trade from Monday settles on Wednesday. A trade from Tuesday settles on Thursday.

A trade from Wednesday settles on Friday, but a trade from Thursday settles on... the following Monday. The trade has to be rolled through the weekend, because banks are closed on Saturday and Sunday. Triple rollover interest is applied to FX trades open at 5pm New York Time on Wednesday, because that marks the beginning of the new 24-hour trading day (Thursday) in the global FX market.

It's curious your broker doesn't apply interest in a way that banks and other brokers do. If nothing else, it might present an arbitrage opportunity for you. For example, could you go short USD/ZAR and EUR/TRY with a forex broker that lets you earn triple rollover at 5pm on Wednesday, and go long those same pairs with your current broker which might charge you only 1 day's worth of rollover interest for your hedged positions?
  • #11
  • Aug 18, 2016 1:35pm Aug 18, 2016 1:35pm
Quoting Jason Rogers
{quote} That's not the case, Avibe Forex brokers apply (it's not always a charge, since you can also earn) triple rollover interest on Wednesday, because that's how it's applied by the banks providing liquidity to the FX market. This is because spot forex trades have a 2-day settlement period. A spot FX trade from Monday settles on Wednesday. A trade from Tuesday settles on Thursday. A trade from Wednesday settles on Friday, but a trade from Thursday...
You are correct Jason. My bad. Just confirmed.

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  • #12
  • Aug 18, 2016 1:44pm Aug 18, 2016 1:44pm
Quoting avibe
{quote} You are correct Jason. My bad. Just confirmed. {image}
Thanks for sharing that info. So your broker does triple rolls on Wednesday like other brokers? Darn! Was hoping it could be arbed.
  • #13
  • Jul 6, 2018 7:02pm Jul 6, 2018 7:02pm
Hello , I’m new to CFD ... can someone explain to me why the swap charge become so huge ? I only go long 2unit ...I using thinkmarket to trade
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  • #14
  • Jul 7, 2018 2:21am Jul 7, 2018 2:21am
You better off trading real stocks
  • #15
  • Jul 7, 2018 3:52am Jul 7, 2018 3:52am
Quoting johnnycash
You better off trading real stocks
Yea , CFD hate me I guess
  • #16
  • Jul 8, 2018 5:50am Jul 8, 2018 5:50am
Quoting Ruix90
Hello , I’m new to CFD ... can someone explain to me why the swap charge become so huge ? I only go long 2unit ...I using thinkmarket to trade {image}
For CFD stocks, I believe that the interest is levied on daily at ~6%pa rate. Check with your broker.

It differs greatly from forex.
  • #17
  • Jul 9, 2018 8:35am Jul 9, 2018 8:35am
Quoting commandK
{quote} For CFD stocks, I believe that the interest is levied on daily at ~6%pa rate. Check with your broker. It differs greatly from forex.
Thank you , will check with my broker
  • #18
  • Nov 7, 2018 5:39am Nov 7, 2018 5:39am
hi

i am wondering why long and short swaps to not attract the same overnight interest? longs are higher than shorts. for example silver US....long is -1.61 and short is +0.51

how come the discrepancy?
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  • #19
  • May 15, 2019 2:00pm May 15, 2019 2:00pm
Quoting Jason Rogers
{quote} Hi Apom, Keep in mind it works both ways. If you are long the currency in the pair with the higher interest rate (for example if you are long TRY/JPY or short USD/ZAR), then you earn the swap instead of paying it. The strategy of holding a trade open to earn the swap is called carry trading, and we recently had a discussion about this. The swap rate (AKA rollover interest) is applied to any trades open at 5pm New York Time, regardless of how long the trades have been open....
Thanks this is of great help to me
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  • #20
  • Nov 19, 2021 5:35am Nov 19, 2021 5:35am
Quoting Jason Rogers
{quote} That's not the case, Avibe Forex brokers apply (it's not always a charge, since you can also earn) triple rollover interest on Wednesday, because that's how it's applied by the banks providing liquidity to the FX market. This is because spot forex trades have a 2-day settlement period. A spot FX trade from Monday settles on Wednesday. A trade from Tuesday settles on Thursday. A trade from Wednesday settles on Friday, but a trade from Thursday...
After taking triple swap rate does broker charge swap again on Friday for the same trade?
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