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How to understand how much will be debited when transferring an open position to 1 day

In theory, positive and negative swaps should be equal. But this is not so. When buying a currency, such as Euro for US dollars, the trader performs the following operations:

  • takes a loan in dollars (if the currency of the trading account differs from the currency for which the goods are purchased, then currencies are additionally converted) for the volume of the transaction and under the terms of leverage;
  • puts on the deposit “goods”, that is, euros;
  • receives% for the placed deposit;
  • pays interest on a loan.

When closing a transaction, the exchange rate difference at the time of closing is taken into account, the commission for the transaction and the difference in the amount of funds received when placing a deposit and paying interest on a loan are debited.

In fact, it is still more complicated. Each broker has a bank that provides him with credit funds for transactions. The interest for the use of funds differs from the calculated one, as if the funds were provided by the central bank of those countries in whose currency transactions are made. Therefore, for understanding, it is worth familiarizing yourself with the table of current swaps of a particular broker.

A negative value means a negative swap, that is, funds will be debited from your account, a positive value means that funds will be credited to your account.

Where can I see the current accrued transaction swap?

Accrued swap when transferring an open position is displayed in the current open transaction in the trading terminal.

If the transaction is closed during the trading day, a swap on it is not charged. The swap size will depend on the volume of the transaction and increase or decrease proportionally.

A swap is charged for each day of maintaining an open trading position. It accrues at 16:00 EST (Eastern Standard Time, New York time on the East Coast of the United States), which corresponds to 23:00 GMT (GMT) or approximately 2:00 am Moscow time (or 1:00 depending on winter or summer time).

It is worth considering that on the night from Wednesday to Thursday, a triple swap is charged for an open position. But when transferring an open position from Friday to Monday, a trader pays a swap in just one day. Such a system was introduced to compensate for days off when banks are not working, but interest on the loan must be paid in any case.

The swap size can be specified in advance for each instrument. To do this, in the “Market Watch” window, in the “Symbols” tab, right-click on the desired tool and select “Contract Specification”. In the window that opens, when scrolling, you can find the swap size for long (buy) and short (sell) positions for this instrument.

Swaps? When should you pay attention to them?

A novice trader is often afraid of the very existence of an additional fee for transferring open positions to the next day. This is one of the factors that force a beginner to trade exclusively within the day.

Partly such a fright is formed under the influence of fear. After all, profit still needs to be received, and the commission for opening a transaction has already been paid. Why pay also for the transfer of an open position. However, with experience it comes to the understanding that traders trading outside of one trading day receive, on average, greater profits than those who conduct exclusively intraday trading.

In addition, you can earn on positive swaps. This does not mean that it is not necessary to carry out technical and fundamental analysis before the transaction. Ultimately, the main profit of the trader is formed precisely because of the exchange rate difference in currencies. And it can be many times higher than the profit or loss from the swap. Depending on the popularity of a particular instrument, the commission for opening a transaction may initially be greater than the size of a positive swap. Therefore, an attempt to earn on holding a position for one day can be a failure.

It makes sense to pay attention to swaps if you hold an open position for a long period of one month or more. Then they can be comparable in terms of profit with goals that can be set in a particular transaction. But this is only if there are positive swaps for this instrument and the selected open position.

Attention to the size of the swap, as well as the commission, should be given when trading “exotic” and unpopular currency pairs, for example, the Mexican peso or the Turkish lira. Relatively high commissions and swaps are formed when trading currency pairs, which do not include the US dollar, that is, “crosses”.

In the case of trading in major major currency pairs, one of the components of which is the US dollar, you should not pay special attention to the size of swaps. The potential profit on these operations will be an order of magnitude higher than the size of the swap.

If you are more attracted to scalping or intraday trading, the size of the swap generally ceases to play at least some role.

Trading Options for Long-Term Investors

There are trading strategies for long-term investors, based on profit from the percentage difference, that is, from accruing positive swaps. That is, in fact, these strategies do not focus on achieving a specific goal at the price of the instrument, but only on holding the position for a long time and receiving income from a positive swap. In this case, the direction of the trend is in any case worth considering. If it globally coincides with the direction of the transaction, the positive swap is large, and the commission for the transaction is low, then such an operation makes sense.

Strategies based on generating income from interest rate differences are called carry trading. They are mainly used by large investors who earn on speculative trading. At the global level, such strategies are generally more complex. For example, in recent years, in Russia, Kerry trading by foreign investors has been actively flourishing. They play not only on the difference in interest rates in Russia, Europe or Japan, but also earn on operations with Russian government bonds (OFZ). When the ruble appreciates, investors earn extra on exchange rate differences. Despite the tendency to reduce interest rates in Russia and increase in developed countries, the income received by investors from investing in Russian government securities is still high. Therefore, even taking into account all other risks,

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To conclude a framework agreement, the client is obliged to confirm that he is familiar with the following risks associated with the conclusion, execution and termination of obligations under the framework and individual agreements:

1. The risk of loss to an individual as a result of changes in foreign exchange rates (currency risk).

2. The risk of loss to an individual as a result of non-performance, untimely performance or incomplete performance by the Forex dealer and (or) the bank in which the Forex dealer account is opened, financial obligations to such an individual in accordance with the terms of the Agreement and Separate Agreements (credit risk )

3. The risk of loss to an individual as a result of a violation of applicable law and (or) internal documents of a Forex dealer by employees of a Forex dealer, a malfunction (failure) of software and hardware of a Forex dealer and (or) individual, a mismatch of software and hardware of a forex dealer to the nature and volume of transactions it conducts, transactions by a third party on behalf of an individual as a result of receipt by such a person randomly or as a result of his deliberate actions of unauthorized access to the possibility of making such transactions on behalf of an individual, carrying out operations by an individual that are not in accordance with his intentions, for reasons related to insufficient experience of working with this individual with software and hardware of a forex dealer and (or) making it random actions, as well as the result of external events (operational risk).

Contracts or financial instruments proposed for conclusion are highly risky and may lead to the loss of the deposited funds in full. Before making transactions, you should familiarize yourself with the risks associated with them.

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