Forex trading involves the exchange of currencies, and it is essential for traders to understand the various charges that come with this type of trading. One of the charges that traders have to pay is the swap fee. A swap fee is the interest rate that a trader pays or receives for holding a position overnight. In this article, we will explain how to find swap fee in forex.
What is a Swap Fee?
A swap fee is a charge that a trader pays or receives for holding a position overnight. The fee is calculated based on the difference between the interest rates of the currencies being traded. If the interest rate of the currency being bought is higher than the interest rate of the currency being sold, the trader will receive a credit. On the other hand, if the interest rate of the currency being sold is higher than the interest rate of the currency being bought, the trader will pay a fee.
For example, if a trader buys the EUR/USD pair, which has an interest rate of 0.05%, and sells the USD/JPY pair, which has an interest rate of -0.10%, the trader will pay a swap fee of 0.15% (0.05% – (-0.10%)) for holding the position overnight.
How to Find Swap Fee?
Swap fees are usually displayed in the trading platform, and traders can easily find them by following these steps:
Step 1: Open the trading platform
The first step is to open the trading platform. Most trading platforms display the swap fee for each currency pair in the “Market Watch” window.
Step 2: Select the currency pair
Next, select the currency pair for which you want to find the swap fee. You can do this by clicking on the currency pair in the “Market Watch” window.
Step 3: Right-click and select “Specification”
Once you have selected the currency pair, right-click on it and select “Specification” from the drop-down menu.
Step 4: Find the swap fee
In the “Specification” window, you will find various details about the currency pair, including the swap fee. The swap fee is usually displayed as a positive or negative number, depending on whether the trader will receive a credit or pay a fee for holding the position overnight.
It is important to note that swap fees are usually charged at 5:00 PM EST, which is the end of the trading day. If a trader holds a position overnight, the swap fee will be charged or credited to the account.
Conclusion
Swap fees are an important aspect of forex trading, and traders need to understand how they work and how to find them. The swap fee is calculated based on the difference between the interest rates of the currencies being traded, and it is usually displayed in the trading platform. By following the steps outlined in this article, traders can easily find the swap fee for each currency pair and factor it into their trading strategy.
