Swap (rollover)

In practice

If you buy USD/JPY and US rates are higher than Japanese rates, you are paid a small swap each night you hold it. If you sell USD/JPY instead, you pay the swap. On Wednesday nights the charge is triple, covering the weekend the market was closed.

Why it matters for traders

Swaps turn a multi-day trade into a daily cost or credit that quietly erodes or boosts your result. Swing and position traders must factor them in, because holding a 'winning' trade against a heavy negative swap can actually lose money. Day traders avoid the issue entirely by being flat before the day ends.

Common pitfall

The common mistake is holding a large position for weeks against a heavy negative swap and letting the daily financing quietly erase a price gain. Beginners rarely check the swap rate before entering. Always read the swap for your direction and pair, factor it into a multi-day trade's break-even, and remember Wednesday's triple charge — a surprise that turns a flat week into a loss for an unprepared swing trader.

Putting it in context

Cost and leverage terms like this one matter more to your long-term results than most entries or indicators ever will. Two traders taking identical trades can end the year with very different accounts purely because of spread, swap, commission, and position size. The habit to build is computing the full cost of a trade before entering it — not just the stop-loss distance, but every charge the broker applies between open and close. On a demo account these costs feel invisible; on a live account, over hundreds of trades, they decide whether an otherwise sound strategy is profitable. Revisit your broker's actual charges every few months, because advertised headline figures rarely reflect what an average retail trade really pays.

Lessons that use this term

• Spread, commission and swap

  The three ways a trade costs you money before it even moves.

Related tips

• Commodities & Metals Trading

Related terms