Swap rates: what does your broker charge right now?
Swap rates moved after the Fed's decision, and brokers update them on their own schedules with their own mark-ups. Comparing actual numbers shows how wide the differences are.
Post:
- the broker, account type and pair
- the long and short swap shown in your platform
- the date you checked
The carry trade guide explains what swap represents.
Background: The carry trade explained, and why it can unwind so quickly
Borrowing in a low-interest currency to hold a high-interest one can earn steady income, until the exchange rate turns. How carry works and where the risk hides.
What is a carry trade in forex?
Buying a higher-yielding currency against a lower-yielding one to earn the interest rate difference, usually received as a positive overnight swap.
Why do carry trades unwind suddenly?
They are often crowded. When markets turn fearful, many traders close the same positions at once, buying back the funding currency and pushing it sharply higher.
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