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What Is The Swap Price?
#1
Swap as the meaning of the word change means to swap. But for forex traders, the term means much more. Because many investors are curious about what a Swap is, it is worth explaining it by going into a little more detail. A Swap is a very important point that many investors confuse, sometimes even don't notice. Because this concept is actually the creator of the plus-minus situation that occurs in your account.

More specifically, a swap is the cost of overnight transport that is reflected in your account, plus or minus, according to the difference in interest between the currency pairs that you have made. In other words, if you have decided to put the high interest one of the two currencies into the market and apply the idea of keeping the low interest one in your hand, the overnight cost of carrying the low interest money will be reflected in your account.

Swap transactions are based entirely on the logic of lending the money received and borrowing the money sold.

For a simple example, when you create a long position at USD/GBP parity, you give the Turkish lira to the market and receive a dollar with a low interest rate in return. This transaction will return to the investor as a minus-directional swap price. When you sell USD/GBP, you give dollars to the market and receive Turkish lira in return. Because you give a low-interest currency to the market, you will also get a plus-way swap income.

Swap prices are valid for overnight jobs, transactions that are not closed on the same day and transferred to another day. This application is carried out on the basis of official interest rates announced by the Central Bank.

Watch Out For Wednesdays

As we just said, the swap cost does not apply to overnight jobs and transactions that you open and close during the day. But forex traders should be wary of Wednesdays. Swap prices are applied on a 1-day basis during the week, except on Wednesday. A 3-day swap fee is applied to a position opened on Wednesday and not closed until 00:00. This is due to the fact that markets are closed over the weekend and open positions in pairs are valued for 2 days. On holidays when markets are closed, the practice of swaps continues in positions that are open.

In the Forex market, you also have an option to create a forex account without swaps. This type of account appeals to investors who prefer to stay away from interest. Forex market investors who do not accept the cost of carrying per night can easily take advantage of this type of account.

In short, the swap is called the overnight cost reflected in your account, plus or minus, according to the difference in interest between the currency pairs you have made.
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