TRADE

Swaps And Spreads


Forex Swap Rates and Spreads Explained

What is Forex Swap ?

Swap rates are the interest rate differentials embedded in currency trades.

To put it more simply, consider how a forex trade works: you borrow one currency to buy another. For instance, if you are buying EUR/USD, you are borrowing US dollars and buying euros with the proceeds. In doing so, you are paying interest on the US dollars you borrow, but earning interest on the euros you bought.

How do I get the Most Up-to-Date Forex Swap Rates ?

For the most up-to-date Forex swap rates, please refer to the Market Watch panel in our MetaTrader 4 (MT4) platform. Simply follow the steps outlined below

1. Locate your product in the ‘Market Watch’ window. Right click, and select ‘Symbols’.

2. Select the product you wish to view from the list. Select ‘Specifications’.

3. Open a trading account and deposit through one of our secure payment methods.

Important Swap/Rollover Rate Facts

Swap rates are applied at 00:00 platform time.

Each currency pair has its own swap charge and is measured on a standard size of 1 lot (100,000 base units).

Swaps are applied each night onto your open positions and when the position is left open it is given a new ‘value date’.

On Wednesday night however, the new value date for a trade held open is changed to Monday. Due to this, swaps are charged at triple the rate. Check your swaps on your MT4 Market Watch panel. You simply right click, select ‘symbols’, select the instrument and then select ‘Properties’.

How do you calculate a swap rate ?

Swap debits/credits are calculated as follows:

Current long/short rate * number of lots = swap debit/credit in second currency

Example 1


Your account currency is AUD and you hold one lot long on AUD/USD on 5 February 2015:

+4.96 * 1 = $.4.96, converted to your account currency = A$6.35

Example 2


Account currency is USD, you hold 2.5 lots short of EUR/GBP on 5 February 2015:

-1.08 * 2.5 = -£2.70, converted to USD = -$4.13

What are forex spreads ?

Spread is the difference between a Bid and the Ask prices of each currency from a currency pair. In fact, this is a direct initial loss for the trader, which should be covered in the process of further trading.

Let's give an example on the popular EUR/USD pair with a hypothetical quote of 1.1152/1.1156. From the difference in the currency value, it can be seen that the spread in this case for one lot is 4 pips. To compensate for this loss, you want the currency pair quotes to change in your favor by at least 4 pips. Once this happens, you will start receiving a profit.

How to Calculate Spread

Spread = Ask (the price a buyer is willing to pay) – Bid (the price at which a market maker is willing to buy). Once again, set in pips for convenient calculation.

For example, if the quote of the GBP/USD currency pair is, bid = 1.2920 and ask = 1.2923, then Spread = 1.2923-1.2920 = 0.003 USD or 3 pips.

Check out our typical spreads

Forex

Currency pair Standard average spread
XAG USD | Silver Spot / US Dollar 19
XAU USD | Gold Spot / US Dollar 19
Currency pair Standard average spread
AUD CAD | Australian Dollar / Canadian Dollar 18
AUD CHF | Australian Dollar / Swiss Franc 17
AUD JPY | Australian Dollar / Japanese Yen 17
AUD NZD | Australian Dollar / New Zealand Dollar 19
AUD USD | Australian Dollar / US Dollar 14
CAD CHF | Canadian Dollar / Swiss Franc 16
CAD JPY | Canadian Dollar / Japanese Yen 16
CHF JPY | Swiss Franc / Japanese Yen 18
EUR AUD | Euro / Australian Dollar 17
EUR CAD | Euro / Canadian Dollar 21
EUR CHF | Euro / Swiss Franc 14
EUR GBP | Euro / British Pound 16
EUR JPY | Euro / Japanese Yen 10
EUR NZD | Euro / New Zealand Dollar 25
EUR USD | Euro / US Dollar 11
GBP AUD | British Pound / Australian Dollar 32
GBP CAD | British Pound / Canadian Dollar 25
GBP CHF | British Pound / Swiss Franc 24
GBP JPY | British Pound / Japanese Yen 24
GBP NZD | British Pound / New Zealand Dollar 35
GBP USD | British Pound / US Dollar 16
NZD CAD | New Zealand Dollar / Canadian Dollar 20
NZD CHF | New Zealand Dollar / Swiss Franc 20
NZD JPY | New Zealand Dollar / Japanese Yen 15
NZD USD | New Zealand Dollar / US Dollar 13
USD CAD | US Dollar / Canadian Dollar 14
USD CHF | US Dollar / Swiss Franc 12
USD JPY | US Dollar / Japanese Yen 12

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