The Times Australia
News From Asia

.

Octa seeks to clarify Forex swap and swap-free accounts

KUALA LUMPUR, MALAYSIA - Media OutReach Newswire - 29 March 2024 - One of the most misunderstood terms in Forex trading is swap or Forex swap. To trade successfully, you should understand what Forex swap depends on and how it is calculated.

This material describes what a Forex swap is, explains its mechanics, and describes swap-free trading accounts.Forex swap.


Octa

Definition

Swap is a commission charged for carrying open positions overnight to the next trading day in the Forex market. The exact moment when the swap is withdrawn from your trading account depends on your broker. Most brokers charge it most often between 11 p.m. and 12 a.m. server time.

The Forex market is over-the-counter and non-deliverable, meaning you are not the owner of the trading asset. In order not to cause the need for calculations, the system automatically closes an open position on the current trading day and opens it on the next one. Such closing is considered conditional, as the position is carried over, and the swap is charged.

Depending on the value of the swap and the position, the swap can be negative or positive. In other words, you will either have to pay a commission or be paid a commission for holding an open position overnight. This is because the margin system used in Forex trading allows you to use the additional capital the broker provides. You borrow funds to open a position from your broker.

There is an opinion among traders that the Forex swap is nothing but a broker's commission. However, this is not true. Let's find out how swaps work in the Forex market.

How do swaps work in the Forex market?
Every time you open a position, you make two transactions: buying one and selling another currency in a currency pair. So, you are essentially borrowing that money to sell one of the currencies and need to pay interest on the borrowed amount. However, in doing so, the currency you buy will earn you interest.

If the base interest rate on the currency you buy is higher than the currency you sell, you can earn interest on the difference in rates for carrying an open position to the next day. However, given the broker's markup, regardless of the direction of the open position (buying or selling), you will have to pay a commission.

Thus, the value of a swap depends on the market and the instrument you are trading. For example, the swap on the same EURUSD and USDJPY positions will differ.

The value of swap varies depending on:

  • online broker
  • type of the position—Buy or Sell
  • type of the asset
  • number of days the position remains open
  • nominal value of the position (number of lots).
Why is there a triple swap?
Sometimes, a swap is charged for holding an open position over the weekend, even if you did not have it on Saturday and Sunday. Such a fee is called a triple swap. Since the markets are closed on weekends, the triple swap was invented to compensate for this and is charged either on Fridays or Wednesdays, depending on the specific market.

This is because orders are settled on the Forex market on the second working day from the trade date (T+2). Since the value date falls on a weekend, the transfer is made for three days at once (on Monday). Therefore, from Wednesday to Thursday (at 12 a.m.), the swap is charged for the past weekend and Wednesday.

In other words, if you hold your position overnight when the triple swap is applied, your order will be charged three times the standard swap.

Are there swap-free accounts?
To make trading more convenient and accessible, many brokers have introduced the concept of swap-free accounts.

Swap-free accounts relieve the trader from the need to constantly monitor the size of accounting rates on currencies in a currency pair, make trading more straightforward, and allow taking into account in advance the commission for the transfer of positions when calculating the financial result of planned transactions. It is also relevant for those clients who cannot use swaps due to religious beliefs. This determines the second name of this type of account—Islamic accounts.

Charged daily, the swap fee accumulates over time, making trading less favourable. To enhance the investment opportunities of its customers, Octa has decided to remove swap fees for all types of trading accounts. These fees will no longer prevent traders from using medium- and long-term strategies in the financial market. Now, they can keep that position open for as long as they see fit and with no swap cost.



The issuer is solely responsible for the content of this announcement.

Octa

is an international broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and various services already utilised by clients from 180 countries with more than 42 million trading accounts. Free educational webinars, articles, and analytical tools they provide help clients reach their investment goals.

The company is involved in a comprehensive network of charitable and humanitarian initiatives, including the improvement of educational infrastructure and short-notice relief projects supporting local communities.

Octa has also won over 70 awards since its foundation, including the 'Best Educational Broker 2023' award from Global Forex Awards and the 'Best Global Broker Asia 2022' award from International Business Magazine.

Times Magazine

Building a Strong Online Presence with Katoomba Web Design

Katoomba web design is more than just creating a website that looks good—it’s about building an online presence that reflects your brand, engages your audience, and drives results. For local businesses in the Blue Mountains, a well-designed website a...

September Sunset Polo

International Polo Tour To Bridge Historic Sport, Life-Changing Philanthropy, and Breath-Taking Beauty On Saturday, September 6th, history will be made as the International Polo Tour (IPT), a sports leader headquartered here in South Florida...

5 Ways Microsoft Fabric Simplifies Your Data Analytics Workflow

In today's data-driven world, businesses are constantly seeking ways to streamline their data analytics processes. The sheer volume and complexity of data can be overwhelming, often leading to bottlenecks and inefficiencies. Enter the innovative da...

7 Questions to Ask Before You Sign IT Support Companies in Sydney

Choosing an IT partner can feel like buying an insurance policy you hope you never need. The right choice keeps your team productive, your data safe, and your budget predictable. The wrong choice shows up as slow tickets, surprise bills, and risky sh...

Choosing the Right Legal Aid Lawyer in Sutherland Shire: Key Considerations

Legal aid services play an essential role in ensuring access to justice for all. For people in the Sutherland Shire who may not have the financial means to pay for private legal assistance, legal aid ensures that everyone has access to representa...

Watercolor vs. Oil vs. Digital: Which Medium Fits Your Pet's Personality?

When it comes to immortalizing your pet’s unique personality in art, choosing the right medium is essential. Each artistic medium, whether watercolor, oil, or digital, has distinct qualities that can bring out the spirit of your furry friend in dif...

The Times Features

How much money do you need to be happy? Here’s what the research says

Over the next decade, Elon Musk could become the world’s first trillionaire[1]. The Tesla board recently proposed a US$1 trillion (A$1.5 trillion) compensation plan, if Musk ca...

NSW has a new fashion sector strategy – but a sustainable industry needs a federally legislated response

The New South Wales government recently announced the launch of the NSW Fashion Sector Strategy, 2025–28[1]. The strategy, developed in partnership with the Australian Fashion ...

From Garden to Gift: Why Roses Make the Perfect Present

Think back to the last time you gave or received flowers. Chances are, roses were part of the bunch, or maybe they were the whole bunch.   Roses tend to leave an impression. Even ...

Do I have insomnia? 5 reasons why you might not

Even a single night of sleep trouble can feel distressing and lonely. You toss and turn, stare at the ceiling, and wonder how you’ll cope tomorrow. No wonder many people star...

Wedding Photography Trends You Need to Know (Before You Regret Your Album)

Your wedding album should be a timeless keepsake, not something you cringe at years later. Trends may come and go, but choosing the right wedding photography approach ensures your ...

Can you say no to your doctor using an AI scribe?

Doctors’ offices were once private. But increasingly, artificial intelligence (AI) scribes (also known as digital scribes) are listening in. These tools can record and trans...