Swaps, rollover and the cost of holding positions
Why holding a position overnight costs or pays interest, how the daily rollover works, and why long holds can change your result.
What a swap is
When you hold a spot forex position past the daily rollover time, the broker credits or charges interest based on the difference between the two currencies' interest rates. Buying a currency with a higher rate than the one you sell may earn a small credit; the reverse usually costs money. The amount depends on the broker's markup, the position size and the day of the week.
The rollover
Most brokers roll positions over once a day, often at 5 pm New York time, and many charge the rollover for three days on Wednesday to cover the weekend settlement. Check your broker's exact schedule and swap table, because the times and the triple-day rule differ.
Why it matters for a ladder
A ladder can stay open for days or weeks, and swap costs accumulate on every open lot. A basket that is only slightly out of the money can become a larger loss when swaps are added, and a basket that closes at a small net target can end with less profit than expected. Include expected swap costs in your planning, especially for deep ladders that run for long periods.
Key takeaways
- Holding overnight can cost or pay interest depending on the currencies.
- Rollover timing and the triple-day rule depend on the broker.
- Long holds with many open lots make swap costs material.