The swap fee is an implicit cost that should not be overlooked when trading.

MetaMaskVictim · 2026-02-24T20:16:46+00:00

The essay discusses the often-overlooked Swap Fee, which can subtly diminish trading profits. Swap fees arise from interest rate differences between currencies, affecting trade outcomes significantly. It explains positive and negative swap scenarios, the separate rates for buying and selling, and the concept of 3-day swap costs for overnight holdings.

MetaMaskVictim

2026-02-24 20:16:46

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Many traders often focus on spreads and commissions but forget about another cost that can quietly eat into profits: Swap Fee — the fee for holding a position overnight. Swap is the cost resulting from the interest rate difference between the currencies or assets you trade, and it can significantly impact your trading results.

Between Interest Rates and the Assets You Trade

When you open a trade order for a currency pair like EUR/USD, you’re “borrowing” one currency to “buy” another. All assets in the world have their own interest rates set by their central banks:

U.S. Dollar (USD) controlled by the FED
Euro (EUR) controlled by the ECB
Japanese Yen (JPY) with very low interest rates

Swap is the net difference of interest between the two sides. For example, if EUR has an interest rate of 4.0% per year and USD has 5.0% per year:

Buy EUR/USD → earns 4.0% but pays 5.0% = -1.0% per year (pay Swap)
Sell EUR/USD → pays 4.0% but earns 5.0% = +1.0% per year (receive Swap)

However, brokers add their own “handling fee” into the actual Swap rate, so in reality, you might pay Swap on both sides (Long and Short).

Types of Swap Traders Need to Know

Positive Swap is when you receive a small amount of money into your account each night. This occurs when the interest rate of the asset you buy is significantly higher than that of the asset you borrow.

Negative Swap is the most common — you pay money out of your account every night. This happens when the interest rate of the asset you buy is lower or not enough to cover the broker’s handling fee.

Swap Long vs Swap Short — Brokers specify separate rates for Buy (Long) and Sell (Short), which are rarely the same for each asset.

3-Day Swap (Triple Swap) — This is something new traders often overlook. Usually, Swap is calculated once per day, but on one day of the week (mostly Wednesday night), you are charged 3 times the usual amount because the Forex market closes on Saturday-Sunday, but interest continues to accrue.

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