What it means
Rollover, also called swap or cost of carry, is the interest differential between the two currencies in a pair, applied daily to held positions. Long the high-rate currency: you earn swap. Long the low-rate currency: you pay swap. The amount is calculated as (rate differential × notional) / 365, with broker markup. Triple swap is charged on Wednesday's close to settle the weekend.
Why it matters
Carry trades earn or lose 4-8% per year on margin from rollover alone, before any FX move. For position traders this is a real return source; for scalpers it's a daily friction; for buy-and-hold retail traders who don't understand it, it's a slow account leak. Brokers also widen the rollover spread vs interbank — a hidden cost layer that compounds.
How to use it
Check the broker's swap table for every pair you trade. If you're holding overnight on a low-rate-currency-long position, factor swap cost into the trade's expectancy. For pure intraday strategies, time exits before 5pm ET to avoid swap entirely. For carry strategies, model swap as a positive return component on the long-high-rate side.
Long AUD/JPY 1 standard lot at AUD rate 4.10%, JPY rate -0.10% → spread 4.20%. Daily swap credit = (4.20% × 100,000) / 365 ≈ $11.50/day, minus broker markup ≈ $8/day net credit. Over 365 days held: ~$2,920 in pure swap income before any FX move.
Why Wednesday gets triple swap
FX settles T+2 — meaning a Wednesday-close trade settles Friday, a Thursday trade settles Monday, and Friday trades settle Tuesday. To capture Friday-Sunday weekend financing, brokers shift weekend swap into the Wednesday rollover. Hold a position through 5pm ET Wednesday → 3 days of swap applied at once. This matters for carry trades held long-term (consistent extra income for long-high-rate, extra cost for long-low-rate) and for swing trades that happen to span Wednesdays.
Swap markup — the hidden broker layer
Brokers don't pass through interbank swap rates verbatim. They widen the bid-ask on swap: long-high-rate positions earn LESS than interbank rates would suggest, short-high-rate positions pay MORE. Typical markup is 0.5-1.5% per year on each side, sometimes higher on exotics. For active carry strategies this can halve net carry returns. ECN brokers tend to mark swap less aggressively; market makers more aggressively.
Frequently asked
Can I avoid swap?
Three ways: (1) close all positions before 5pm ET, (2) trade with an Islamic-account broker (swap-free, but admin fee replaces it), (3) be long the high-rate currency so swap is income not cost. There's no free lunch — swap-free accounts make up the cost elsewhere.
How big is swap as a return component on carry trades?
Historically 3-6% per year on majors and 6-12% on EM carry pairs (USD/MXN, USD/ZAR, USD/TRY) — pre-leverage. With 5x effective leverage that's 15-60% annual carry income BEFORE the FX move, which dwarfs carry on most directional bets.
Where do I see swap rates on my platform?
Every major broker publishes a swap table on their website (search 'broker name + swap rates'). MT4/MT5 show the swap per lot in the symbol specification panel. Some platforms display the swap credit/debit applied each night in the account statement.
Want a worked example or a deeper dive? Ask Rocky how this concept applies to your specific watchlist or trade idea.
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