Swap Rates

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Swap Rates

The meaning of swap is an act of exchanging one thing for another. On the the forex market, Swap is the cost of overnight transportation reflected in the account plus or minus according to the interest differential between different currency pairs invested.

Although swap comes at the top of the least understood and difficult to notice forex terms, its logic is actually quite simple.

Interest is received for the currency sold, interest is paid for the currency purchased until the position is closed on the forex market. The difference between interest received and interest paid is the amount reflected in the accounts. Swap is not the case in closed positions on the same day.

Swap costs are applied for 3 days from 23:59 on Wednesday to Thursday. The reason of this; the ability of markets and liquidity providers to be closed on weekends and the open positions in parities to be valued for 2 days. USDTRY, GAUTRY and USDCAD positions are valued for 1 day, so a 3-day transportation fee is applied from Thursday to Friday. Swapping positions open on holiday days when markets are closed is still ongoing.

Swap charge is released weekly by the financial institutions LiberalFX work with and are calculated based on their risk-management analysis and market conditions. Each currency pair has its own swap charge and is measured on a standard size of 1.0 lot (100,000 base units).

NOTE: The interest rates to be applied in swap transactions are determined by LiberalFX taking into consideration the interest rates applicable at the relevant date according to risk management analysis and market conditions.

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