Held past the close and into the day:overnight, there's swap to pay or be paid.
A trade that remains open past the end of the trading day, conventionally 5 pm New York time in foreign exchange.
Overnight positions incur swap charges or credits based on the interest rate differential between the two currencies.
In plain words
An overnight position is a trade still open when the trading day officially ends. In foreign exchange the day is conventionally taken to end at 5 pm New York time, and a position open at that moment is rolled over into the next day.
See it move
Rollover time, then Swap applied
Why it matters
At rollover the broker applies a swap: a charge or a credit based on the difference between the two currencies’ interest rates, adjusted by the broker. By a common convention three days of swap are applied on one day of the week, often Wednesday, to cover the weekend.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
A broker in this example charges a swap of 5 US dollars per standard lot per night, with the triple charge on Wednesday; a trader opens 2 lots on Monday and closes them on Friday before the rollover.
- 1Per night2 × 5 = 10 US dollars
- 2Rollovers passedMonday, Tuesday, Wednesday and Thursday
- 3Nights charged1 + 1 + 3 + 1 = 6
- 4Total6 × 10 = 60 US dollars
Holding the position for the week costs 60 US dollars in swap, however the price moved.
A common mistake
Opening and closing on the same calendar date does not always avoid swap. What counts is whether the position is open at the rollover time, which falls at a different local hour in each part of the world.
Check yourself
Educational information, not investment advice or a recommendation to trade.