Short answer: A swap is the interest adjustment for holding a leveraged position past the broker’s daily cut-off, usually 5pm New York time. It can be a cost or, occasionally, a small credit. On forex, Wednesday’s swap is normally charged three times to cover the weekend.
Why swaps exist
A leveraged position is effectively funded with borrowed money. For currency pairs, the swap reflects the interest-rate difference between the two currencies, plus the broker’s markup. For index, commodity and share CFDs, it’s a financing charge based on a benchmark rate plus a markup.
When you pay it
- Only on positions still open at the rollover, usually 5pm New York time. Day trades closed before that pay nothing.
- On forex, the Wednesday rollover is usually charged three times, because spot trades settle two days later and that covers Saturday and Sunday.
- Index and commodity CFDs often take the triple charge on Friday instead. Check the broker’s own schedule.
How much it can cost
Swaps look tiny per night, but they compound over weeks. On a position held for a month, the swap can cost more than the spread you paid to open it. Every broker profile on BrokersNest lists the EUR/USD long and short swap, so you can compare.
Swap-free accounts
Many brokers offer swap-free (Islamic) accounts. They usually replace swaps with a fixed admin fee after a few days, or with wider spreads, so they’re not automatically cheaper.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
