Swap in your strategy: profit centre or slow leak?
For swing and position traders, swap can be a meaningful income on the right side of a carry or a constant drag on the wrong one. Most strategies never mention it, and most statements do.
How do you treat swap?
- whether you choose trade direction partly for swap
- the pairs where swap changed your results
- how you verify the swap numbers you're being charged
The carry trade guide and trading costs guide cover both sides.
Background: The real cost of a forex trade: spread, commission and swap
Every trade has costs, and they are easy to underestimate. Here is how to add up the spread, commission and overnight swap on a position.
What is a spread in forex?
The difference between the bid (sell) and ask (buy) price. You pay it every time you open a trade, and it widens when the market is less liquid.
Is a raw spread account cheaper?
Not automatically. Add the spread and the round-trip commission together and compare the total with a spread-only account's typical spread on the pairs you trade.
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