FOREX TRADING BASICS
What is swap rate?
Swap rate is the interest that you earn or pay for holding an open position overnight. Every currency has its own specific interest rate and because Forex is traded in pairs, every trade involves two different currencies with two distinct interest rates.
Positive Swap : If the interest rate on the currency you bought (base currency) is higher than the interest rate of the currency you sold (counter currency), you will earn interest.
Negative Swap : If the interest rate on the currency you bought (base currency) is lower than the interest rate of the currency you sold (counter currency), you will pay interest.
Metatrader 4 automatically calculates your swap rates. Do take note that the swap rate can significantly affect your trade due to the additional cost and profit over a prolonged period.
Why do my swap rates triple for positions held over roll-over on a Wednesday?
Triple swap rates are charged in the roll-over period on Wednesday night to account for the settlement of trades over the weekend where no swap rates are charged due to the market being closed.
How do orders execute over the weekend?
If you place a buy stop or stop entry order at a price level that is filled at the open of the market on Sunday, the order will be filed at the next closest available price. Negative or positive slippages may be experienced depending on the degree of price change from Friday till Sunday.