The Forex swap explained
When you first started trading, were you confused by the column in your metatrader platform which sometimes charged you money and occasionally gave you a little bonus?
It can be a little surprising at first.
Is it possible to use the Forex swap to your advantage and deliberately keep trades open in order to be renumerated at the end of the day?
What is the swap in Forex?
At the end of the day, interest will be charged or paid out on any of your open trades.
On short trades, the interest will be charged against your account. On long trades, the interest will be paid to your account.
How is the interest calculated?
The interest is the differential between the short term exchange rate of the base currency and the short term exchange rate of the quoted currency.
For example, if you are trading the USD/CAD,
What are the risks of the Forex swap?
What if the trade goes against me?
How to use the Forex swap to your advantage
Just starting out in the world of Forex trading? Make sure you use a good Forex calender (read all about that here in this related post).