Trading mechanics
Swap
The financing charge or credit applied to a position held past the daily rollover. It reflects the interest rate difference between the two sides of the pair and can be positive or negative.
Also called: Rollover · Overnight financing
GFN’s figure
Swap is charged on GFN accounts where a position is held past rollover, and it reduces equity - which means it counts toward the same limits every other cost does. Holding overnight is permitted where the account and the underlying market allow.
In detail
Swap,explained
Swap is charged once per night, and typically three times on one weekday to cover the weekend. For a position held for weeks it can become a larger cost than the spread and commission combined.
Because it is deducted from equity, swap counts against the drawdown buffer. A swing position can drift closer to a limit overnight with no market movement at all.
Related
Terms thatcome with it
Most rules only make sense next to the ones they interact with. These are the entries this one depends on.
Rollover time
The point in the day when positions are rolled to the next value date and swap is applied. It is also when many platforms reset daily statistics, and spreads often widen briefly around it.
Commission
An explicit per-lot charge for executing a trade, usually quoted per side. Two sides make a round turn, so the quoted figure has to be doubled to get the cost of a completed trade.
Position trading
Holding trades for weeks or months on a longer-term view. Trade frequency is low, financing costs accumulate, and the account's result depends on a small number of outcomes.
Swing trading
Holding positions for days or weeks to capture a larger move. It requires wider stops, which means smaller positions, and it exposes the account to overnight swap and weekend gaps.
Market close
The end of a trading session for an instrument. Positions held through a close carry gap risk into the next open, and spreads typically widen into the final minutes as liquidity leaves.
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