The overnight interest charge or payment for holding a position past the market’s daily cutoff time (typically 5pm New York for forex). In forex, a swap reflects the difference in interest rates between the two currencies of the pair you are trading. If you are long the higher-interest currency, you earn swap; if you are long the lower-interest currency (and short the higher-yielding one), you pay swap. Brokers calculate swap as an annualized rate and apply it on a per-night basis. You’ll see it as a debit or credit in your account for each open trade held at rollover. For example, an EA that holds a buy trade on AUD/JPY (where AUD had higher interest than JPY) might receive a small positive swap each night. Conversely, a long EUR/USD trade might incur a negative swap if USD interest is higher. Swaps can also include broker financing costs and are tripled on Wednesdays (to account for weekend). For algorithmic trading, swaps matter for long-term strategies: a robot holding trades for weeks or months must overcome accumulated swap fees (particularly if they are negative). For short-term strategies or day trading EAs, swap is usually negligible. Always check your broker’s swap rates – some exotic pairs have very high swaps that can eat into profits (or add to losses). If swap costs are a big concern, consider a Swap-Free (Islamic) Account if available.

Back to Robots Glossary Index