Swap

• What is a swap?
• How to calculate the swap fee of each transaction

What is a swap?

Swap is the interest that traders receive (added to the account) or pay (deducted from the account) when you keep a position open overnight.

Swap is a special kind of cost because traders do not always have to pay this fee to the broker. Swap becomes a transaction cost only when the trader holds the position overnight and the interest rate of the currency bought is lower than the interest rate of the currency sold.

If the position ends during the day (before the swap time), you do not have to pay the swap fee, or if the interest rate of the bought currency is higher than the interest rate of the sold currency, you will receive a swap fee instead of having to pay the swap fee.

How to calculate the swap fee of each transaction

To calculate the swap for each trade, you need to see if the Swap type of the symbol is In points or percentage terms. Each type of Swap will have a different formula for calculating the swap fee.

Calculation in points

Swap size is set in points and calculated by the following formula:

Swap size * Point price

Depending on the position direction, a swap size is taken from the "Long positions" or "Short positions" field. The calculation is performed in the following order:

• Calculating the point price in a symbol profit currency considering a position volume
• Converting the obtained price into a client's deposit currency
• Calculating a swap sum using the formula shown above

A single point price is a profit obtained when the price moves one point for a position of a specified volume. The price (including converting to the deposit currency) is performed according to the type of the profit calculation by symbol depending on the position direction.

Example 1:

• Buy 2 EURUSD with the contract volume of 100 000 and Forex profit calculation type, the point price is calculated as follows: 2 * 100 000 * 0.00001 = 2 USD
• If the deposit currency is USD and the swap for long positions is -7, the total sum is as follows:
• 2 * (-7) = -14 USD

Example 2:

• Sell 3 USDCHF with the contract volume of 100 000 and Forex profit calculation type, the point price is calculated as follows: 3 * 100 000* 0.00001 = 3 CHF

• If the deposit currency is USD, the price is converted at the current rate:

  3 * 0.90492 = 2.71 USD (with rounding)

• If the swap for short positions is -7, the total sum is as follows:

  2.71 * (-7) = 18.97 USD

Calculation in percentage

In this case, the annual interest rate is specified for long and short positions. Since swaps are calculated and charged every day at the end of the day time, the calculated amount of the annual interest rate is divided by the number of days in a year.

When charging swaps, first the cost of one symbol lot is calculated (the symbol of the opened position), and then the specified percent is calculated, the obtained amount is multiplied by the position volume (in lots) and the result is divided by the number of days in a year.

In percentage terms, using current price — the swap is calculated as the percent from the current position cost:

(cost of 1 lot of position * volume in lots * specified swap size /100)/[days in a year]

The calculation of the cost of 1 lot of a position depends on the type of profit/margin calculation of the symbol:

• For the symbols with the Forex type of calculation, the cost of 1 lot of a position is calculated in the base currency and is equal to the contract size. For example, for the EURUSD  symbol that has a contract size of 100 000 the cost of 1 lot of a position is equal to 100 000 EUR. The feature of Forex symbols is the cost of 1 lot of a position in the base currency for them does not change in time. Thus, both modes of charging swaps in percentage terms work identically for the Forex symbols.
• For the symbols with CFD, CFD Leverage, CFD Index, and Futures type of calculation the cost of 1 lot of a position is also calculated in the base currency. Since the contract size of such symbols is not represented in money (but in the number of securities for example), then to represent the position cost in money the contract size is additionally multiplied by the symbol price. For symbols of the Futures type, the resulting value is multiplied by the tick value to tick size ratio. For example, if a Futures symbol has the base currency USD, contract size 100, its price is equal to 33 and the tick value/tick size ratio is 1/0.1, then the cost of 1 lot of the position is equal to 100*33*10 = 33 000 USD. For a CFD symbol with the same parameters, one lot size would be 100*33 = 3300 USD.

If the base currency of the symbol is different from the deposit currency, the swap is converted into the deposit currency. The conversion is performed considering the position direction.

Example 1:

• Buy 2 DJ30 with the contract volume of 10 and CFD profit calculation type, the current price is 35123.4
• If the base currency is USD and the swap for long positions is -2.64, the total sum is as follows:
• 2 * 10 * 35123.4 * -2.64% / 360 = -51.51 USD