{quote} How can 0.1 lot get -2.52 swap? The specification writes -2.75. If I trade 1 lot it is fair enough. But I'm trading 0.1 lot! I should get -0.27.
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Hi; swap is not like the calculation as like trading spread; it’s a different calculation.
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Joined Mar 2016
|641 Posts
generally the brokers we have offer swap account for the traders who are above all Muslims, in their religion any kind interest considered as like Illegal issue something, for that reason brokers make sure interest free account which is mainly considered as swap free account.
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Joined Apr 2020
|370 Posts
Swap is the charge applicable when a position is held open during the night. These charges are not from the broker but from the bank institutions and the liquidity providers.
Swap will be either credited or debited to your account depending on the instrument you are trading in and the position type you have.
You can check our swap rates by following the below steps:
MT4/MT5:
Right clicking on any instrument in the 'Market Watch' section > left click on the 'Specification' button. A new window will open that will show the swap rates for the instrument selected.
Negative swap means the swap charges will be deducted from your account. But sometimes swap points are mentioned on the trading platform so we first have to calculate the swap charges using the following formulae- Swap charges= Swap Points* No of days positions are held open* Lot size* Contract Size* Minimum price fluctuation* Conversion price to account base currency. And swap charges and swap points both are given in per lot.
Swap on the Forex exchange is a transfer of a transaction to the next day. There is a swap that is a difference, sometimes significant, in interest rates between countries. For example, if you buy a pair of GBPUSD, you sell the U.S. dollar, and in return, you get the British pound. Since trading is done with leverage, you take credit in one currency and open a deposit in another. At the time of writing, the countries represented have absolutely different rates of the central bank: - U.S. - 2%; - United Kingdom - 0.75%. As a result, we take a loan in dollars at 2% and get pounds, which we deposit only 0.75%. It's not difficult to guess that such a deal carries a loss (0.75 - 2 = -1.25%), which is why the trader is written off swap.
Am I right that with no leverage there shouldn't be any swap? I am a new-be and opened a demo account recently with leverage of 1:1 and still debited swap on my trades. It is my understanding that swaps are because brokers borrow money to maintain a position open which in my case as they don't need to borrow there shouldn't be any swaps.
Unfortunately, that is not how it works. For example, if you have a USD account, you would be unable to trade EURGBP? The broker has to 'lend' you the EUR in order to exchange it for the GBP(believe me you don't want the broker converting USD to EUR and back after the trade).
The fact that you might have $100k in your account is useless. That simply becomes security for the broker. Your idea of 1:1 leverage eliminating swaps would also suggest that swaps should vary with the account leverage(ie 1:500 vs 1:100), which we know it doesn't.
Another point I should mention is that when you make a trade, the broker does not actually need to produce 100 000 EUR if you trade 1 lot EURUSD. Today, most FX contracts are CFD's(contract for difference) which means there is no actual exchange of money. You are simply placing a bet on the movement of a currency pair and only the difference in price matters. In this case they really should not be charging swaps but I suspect the swaps go back to a time before CFD's and they represent a tidy little income for the brokers so they keep it around for 'traditional' purposes. I'm just speculating now - I don't really know lol
Well, there are swap free accounts but they are taking somewhere else their interests. This is fee which brokers are taking for holding position over night. This is regarding On spot CFDs. Depending on instruments, some of them are having swaps, some of them commission which has huge differences!
Swap as I understand it is tha trader will borrow according to the bank that he or she is holding that currency. However, we do not know how this number was borrowed? and which bank did the trader borrow from.
If the specification writes -2.75 what does it mean?
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The amount in pips that you will lose holding some position overnight. If it is positive your account will be credited with additional funds called interest.
