What is swap in forex?
Written by an ex-institutional trader. What the forex swap (rollover) is, how the interest-rate difference between two currencies decides whether you pay or earn it, shown with a diagram, and how it affects your trades.
Direct answer
Swap in forex, also called rollover, is the interest you pay or earn for holding a position open overnight. It is set by the difference between the interest rates of the two currencies in the pair. When you hold a forex position, you are effectively borrowing one currency to buy another, so you pay interest on the one you sold and earn interest on the one you bought. The net of those two is the swap.
If you hold the higher-interest currency, the swap can be positive (you earn); if you hold the lower-interest currency, it is negative (you pay). Swap is charged once at the broker's daily rollover time, usually 5pm New York, and triple swap is typically applied on Wednesday to account for the weekend. Day traders who close positions before rollover avoid swap entirely, which is one reason intraday styles sidestep this cost.
What swap is
Swap, also called rollover, is the interest you pay or earn for holding a forex position open overnight. When you trade a currency pair, you are effectively borrowing one currency to buy another. That means you owe interest on the currency you sold and earn interest on the currency you bought. The net of those two amounts, applied each night you hold the position, is the swap.
It is a real and recurring cost (or occasionally a credit) that sits alongside the spread in the total cost of a trade. On a quick intraday trade it never appears. On a position held for weeks, it can become the largest single cost, which is why it deserves attention from anyone holding overnight.
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How swap is decided
The direction and rough size of swap come from the interest-rate gap between the two currencies. Hold the higher-rate currency and the swap leans positive; hold the lower-rate currency and it leans negative.
In the example, going long AUD/JPY means holding the higher-rate Australian dollar against the lower-rate yen, so the raw differential is positive. Two things complicate the simple picture. First, brokers add a markup, which shrinks positive swaps and deepens negative ones, so swap is often a cost in both directions of a pair. Second, the actual numbers shift as central banks move rates. Always read the real swap figures in your platform rather than assuming the raw rate gap.
When swap is charged
Swap is applied once a day at the broker's rollover time, almost always 5pm New York time, which corresponds to the daily market close. Hold a position across that moment and the swap is credited or debited; close before it and nothing is charged.
One quirk catches people out: triple swap. Because spot forex settles two business days forward, a position held over Wednesday night is booked to settle across the weekend, so brokers charge three days of swap at once, usually on Wednesday. The exact triple day can move around public holidays. If you hold over a Wednesday, expect the swap line to be roughly three times its usual size.
Managing swap costs
Swap matters in proportion to how long you hold. A few practical points:
- Day traders avoid it entirely. Closing before rollover means swap never applies, one of the structural advantages of intraday styles covered in forex trading strategies and the day trading Australia guide.
- Swing and position traders should price it in. Over weeks, negative swap can quietly outweigh the spread. Check the overnight rate before committing to a long hold.
- Direction matters. The same pair can have very different swap on the long versus short side; the less-negative side is cheaper to hold.
- Swap-free accounts exist. Some brokers offer swap-free (Islamic) accounts that replace swap with a flat fee, which can suit longer holds.
Swap is the quieter half of the cost of trading, invisible intraday and significant over time. Pair this with the spread, leverage and margin basics, and compare brokers' overnight rates on the best forex brokers in Australia ranking.
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Rates shown are illustrative. Last reviewed: 2026-06-01.
Frequently asked questions
What is swap in forex trading?
Swap, also called rollover, is the interest you pay or earn for holding a forex position open overnight. Because holding a position effectively means borrowing one currency to buy another, you pay interest on the currency you are short and earn interest on the currency you are long. The net difference, set by the two countries' interest rates, is credited or debited to your account each day the position stays open past the broker's rollover time.
Why am I paying swap on my forex trade?
You pay swap when the currency you bought has a lower interest rate than the currency you sold, so the interest you earn is less than the interest you owe, leaving a net cost. You also pay because brokers add a markup to the raw interest differential, which means swap is often negative on both directions of a pair, not just one. If you hold positions overnight, negative swap is a real recurring cost that eats into profit on longer holds.
What is triple swap on Wednesday?
Triple swap is when three days of swap are charged or credited in a single day, normally on Wednesday. It exists because spot forex settles two business days forward, so a position held over Wednesday night is booked to settle the following Monday, covering the weekend. The broker applies three days of swap at once to account for Saturday and Sunday. The exact triple-swap day can shift around public holidays, so check your broker's schedule.
How do I avoid paying swap in forex?
The simplest way is to close positions before the broker's daily rollover time, usually 5pm New York, so you never hold overnight. This is why scalpers and day traders avoid swap entirely. For traders who must hold longer, some brokers offer swap-free or Islamic accounts that replace swap with a flat administration fee, and choosing the direction of a pair with positive or less-negative swap helps. Over long holds, swap can outweigh the spread as your largest cost.
Can swap be positive and earn me money?
Yes. If you hold the higher-interest currency in a pair, the interest you earn can exceed the interest you owe, producing a positive swap credited to your account each night. This is the basis of the carry trade, where traders hold a high-interest currency to collect the daily swap. In practice, broker markups shrink positive swaps and can turn them negative, so verify the actual swap rates in your platform rather than assuming the raw rate differential.
Does swap apply to CFDs as well as forex?
Yes. CFD positions on indices, commodities and shares also carry an overnight financing charge that works the same way as forex swap: a cost for holding a leveraged position open overnight, based on a benchmark interest rate plus the broker's markup. The terminology varies, swap, rollover, or overnight financing, but the principle is identical. As with forex, closing intraday avoids it, which is why overnight financing matters most to swing and position traders.
