What Is Swap? How Overnight Fees Work and Why Wednesday Counts Triple

Swap, also called rollover, is the overnight interest you pay or receive when you hold a position past the broker server’s day change. Short-term traders barely notice it, but if you hold for weeks or months, swap can become a cost many times bigger than the spread. This article explains where it comes from, how to read it in MT5, and works out the real money step by step.

Where swap comes from

When you Buy a currency pair such as EURUSD, you are in effect holding euros and borrowing dollars to pay for them. The side you hold earns that currency’s interest, and the side you borrow pays the other currency’s interest. So swap has two parts:

1. The interest-rate differential between the two currencies, which follows policy rates (more in When interest rates rise or fall, why do currencies and gold move?)
2. The broker’s markup, its own income, taken from both sides

A made-up example, not today’s real rates. Hold 1 lot of EURUSD (100,000 euros) at 1.1000, worth 100,000 × 1.10 = 110,000 dollars. Assume the euro rate is 2%, the dollar rate 4%, and the broker adds its own 0.5% a year. Per day, divide by 365.

• Pure differential per night = 110,000 × (2% − 4%) ÷ 365 = −6.03 dollars for a Buy, and +6.03 for a Sell
• After the markup, Buy = 110,000 × (−2% − 0.5%) ÷ 365 = −7.53 dollars per night
• Sell = 110,000 × (2% − 0.5%) ÷ 365 = +4.52 dollars per night

Notice the two sides aren’t equal: the paying side pays more than the earning side earns. And when the rate differential is smaller than the markup, swap is negative on both sides, which is common in practice. Each broker calculates its real numbers differently. This formula is only here to show where swap comes from.

Gold pays no interest of its own. Swap on XAUUSD comes from the dollar funding cost and gold lending rates in the market, plus the broker’s markup. A gold Buy is usually negative, while a Sell can be positive or negative depending on the period and the broker.

Positive swap and negative swap

• Negative swap is deducted from your account every night you hold through
• Positive swap is paid into your account every night you hold through

Swap is real money included in a position’s profit or loss. In MT5 you see it in the Swap column of the Trade tab while the position is open, and in the history after it closes. A position where price goes nowhere can still lose money from swap alone if you hold it long enough.

MT5 shows swap in points: converting to money

Find the real values in Market Watch: right-click the symbol and choose Specification. The key fields are Swap type, Swap long (the Buy side), Swap short (the Sell side) and the triple-swap day.

Swap type tells you the unit. The most common is In points. Some brokers set it directly in money, or as an annual interest percentage. If it is in points, convert it with this formula:

Swap per night = points × point size × contract size × lots

The result is in the pair’s profit currency (dollars for both EURUSD and XAUUSD). If your account is in another currency, MT5 converts it for you.

EURUSD is quoted to 5 decimals, so point size = 0.00001 and contract size = 100,000. One point on 1 lot = 0.00001 × 100,000 = 1 dollar. Suppose the spec says Swap long −8 points:

• 1 lot: −8 × 0.00001 × 100,000 × 1 = −8 dollars per night
• 0.10 lot: −8 × 0.00001 × 100,000 × 0.10 = −0.80 dollars per night

Watch the difference between points and pips. With 5-decimal quotes, 10 points = 1 pip, so −8 points is 0.8 pip, not 8 pips (refresh this in Pip vs lot). The −7.53 dollars per lot per night from the interest example above would be about −7.53 points on EURUSD.

Gold (XAUUSD) is quoted to 2 decimals, so point size = 0.01. The usual contract size is 100 ounces (some brokers differ, so check the Contract size field). One point on 1 lot = 0.01 × 100 = 1 dollar. Suppose the spec says Swap long −45 points:

• 1 lot: −45 × 0.01 × 100 × 1 = −45 dollars per night
• 0.10 lot: −45 × 0.01 × 100 × 0.10 = −4.50 dollars per night

Symbol (example)	Swap long	1 point on 1 lot	0.10 lot per night	0.10 lot on the triple night
EURUSD	−8 points	1 dollar	−0.80	−2.40
XAUUSD (100 oz)	−45 points	1 dollar	−4.50	−13.50

All swap values in this article are made up for practice. Real values differ by broker and change with interest rates.

The triple-swap day

Swap is charged once a day, at the server’s day change. It is not charged by the number of hours you hold. A position open at that moment pays a full night; one closed before it pays nothing. Many brokers set the day change to 17:00 New York time, which is around 04:00–05:00 Thai time (UTC+7). The details are in Forex Market Hours in Thai Time.

The market is closed on Saturday and Sunday, so there is no charge on those days, but interest for them still has to be paid. Spot currency settles two business days later, so a position held over Wednesday night also rolls its settlement date across the weekend. That’s why most currency pairs are charged triple on Wednesday night. Over a week you are charged 5 times but pay for all 7 nights.

Two things people often get wrong:

• “Wednesday night” is the server’s Wednesday. The triple charge happens at the end of Wednesday in server time, which in Thai time is early Thursday morning if the broker uses the day change described above
• Not every instrument uses Wednesday. At some brokers, stock indices, oil or crypto CFDs have a different triple-swap day, and instruments that trade at the weekend may be charged every day. Always check the triple-swap field in that symbol’s specification

Crypto perpetual futures have no swap but charge funding at set intervals instead. Compare in Funding rates on perpetual futures.

Swap-free accounts

Many brokers offer accounts without swap, sometimes called Islamic accounts. The terms vary a lot. What you commonly see:

• No swap, but a fixed fee once you hold beyond a set number of days
• Swap is made up for with a wider spread or a higher commission than the standard account
• Limits on which instruments you can trade or how many days you can hold

Nothing is truly free; the cost just moves somewhere else. Before choosing, read the account terms in full, then work out the total cost for the way you actually trade.

Swap and systems that hold for a long time

The cost per night looks small, but it adds up every day whichever way price goes. The chart below uses the same examples: a 0.10-lot gold Buy (−45 points) against a 0.10-lot EURUSD Buy (−8 points), both opened on a Monday.

Working through the 0.10-lot gold Buy:

1. One week = 4.5 × 7 = 31.5 dollars
2. 30 days from a Monday = 4 weeks plus Monday and Tuesday = 31.5 × 4 + 4.5 + 4.5 = 135 dollars
3. At 0.10 lot of gold, a 1-dollar price move = 10 dollars, so 135 dollars means price has to move 135 ÷ 10 = 13.5 dollars your way just to pay that month’s swap
4. If this trade has a Stop loss 10 dollars away, the risk is 100 dollars, yet holding it for a month costs more in swap than the whole trade’s risk

Open several positions at once and the cost multiplies. Grid or averaging-down systems that keep many positions open for weeks get hit especially hard by swap (read Grid, Martingale and Averaging Down). Deducted swap also lowers your margin level, because it keeps eating into equity. See Leverage, margin and stop out.

Don’t get too excited about positive swap either. Suppose EURUSD Swap short is +3 points. A 0.10-lot Sell earns 3 × 0.00001 × 100,000 × 0.10 = 0.30 dollars a night, or 0.30 × 7 = 2.10 dollars a week. But a 10-pip (100-point) move against you at 0.10 lot costs 10 dollars, the same as about 10 ÷ 2.10 = 4.8 weeks of positive swap. And swap values can change whenever interest rates do.

Swap isn’t a one-off fee. It’s rent that runs every night. The longer you hold, the more it belongs among your main costs, not your loose change.

Swap in backtests

MT5’s Strategy Tester charges swap according to the symbol specification: the swap type, the Buy and Sell values and the triple-swap day. Test positions held overnight pay swap just like a live account. You can check it in the Swap column of the report’s deals list, and the net profit in the report already includes swap.

The catch is that the tester uses the swap values in the spec at the moment you run the test, and applies the same values across the whole period. In real life swap moved with the interest rates of each period. So a long-holding system can get backtest results whose swap doesn’t match what actually happened in the past, and won’t match the future either.

Simple ways to handle it:

• Check what share of net profit the total swap makes up. If the share is large, the system is very sensitive to swap
• If the results look good because of positive swap, ask whether the system would survive if swap turned negative
• Test again with the spec from the broker you will actually use, because swap values can differ a lot

For more on why test results differ from live accounts, read Why live results usually fall short of the Backtest.

Swap in your risk plan

1. Check the spec before opening a trade you plan to hold overnight. Look at Swap long, Swap short, Swap type and the triple-swap day
2. Work out the money per night with points × point size × contract size × lots, then multiply by the nights you plan to hold (7 per week)
3. Compare it with the trade’s risk. If the expected swap is a large share of your Stop loss distance, rethink the position size or how long you hold. Size positions with Size your lot from Stop loss distance
4. Log it in your trading journal. Keep swap separate from profit and loss from price, so you can see how much it eats into your results. See the template in Trading journal

Before holding a position overnight, know what it costs per night and which night counts triple.

Common mistakes

• Reading points as pips. −8 points on EURUSD is 0.8 pip, and on gold 1 point is 0.01 dollar of price. Get the unit wrong and your sums are off by ten times
• Thinking you’re safe if you hold less than a day. Swap is charged at the server’s day change. Open at 03:00 and close at 06:00 Thai time and you can still pay a night
• Forgetting the triple night. Holding over the server’s Wednesday night charges three nights at once, and some instruments use another day
• Using one broker’s swap values for another. Both the numbers and the triple-swap day can differ a lot
• Trusting a long-hold system’s backtest without looking at swap. The tester uses today’s values, not each past year’s values
• Picking a side for positive swap. A small move against you erases weeks of swap income