What is swap in forex? Overnight fees and swap-free accounts
Hold a trade past the daily rollover and it earns or pays swap. Where that number comes from, why Wednesday counts three times, how to calculate it and how swap-free accounts work.
Swap in forex is the interest adjustment applied to a position that stays open past the daily rollover. It reflects the interest-rate difference between the two currencies in the pair, plus the broker’s markup, so it can be a small credit or a charge. For forex pairs it is commonly tripled on Wednesday to cover the weekend.
Trades opened and closed before the rollover never pay it. A swap-free (Islamic) account removes interest-based swap altogether; brokers usually replace it with a different overnight cost, such as a fixed administrative fee.
What is swap in forex?
Every forex trade is two positions in one. Buying EUR/USD means, in effect, holding euros and borrowing US dollars to pay for them. Each currency carries its central bank’s interest rate, so the position has a small cost or return every night.
Swap — also called the rollover fee or overnight fee — is how that difference reaches your account. If the currency you hold pays more interest than the one you borrow, the differential works in your favour. If it pays less, it works against you.
Why swap can be positive on one side and negative on the other
The two directions of a pair sit on opposite sides of the same differential. The broker then applies a markup to both sides, much as a bank pays less on deposits than it charges on loans. The markup shrinks a credit and enlarges a charge, which is why many pairs show a negative swap in both directions.
Swap rates are not fixed: brokers update them as interest rates and funding costs change.
When is swap charged? The daily rollover
Swap is not charged by the hour. It is applied once a day, at the rollover: the moment the trading day ends and open positions are carried into the next one. In forex this is commonly 17:00 New York time, which is 21:00 UTC while New York is on daylight-saving time and 22:00 UTC the rest of the year.
Many brokers set their server clock so the rollover falls at midnight server time. Either way, only positions still open at that moment receive a swap credit or charge.
The rollover line sits at 21:00 UTC during New York summer time and at 22:00 UTC in winter.
That is why intraday traders rarely think about swap, while swing traders meet it on every trade they hold (see scalping vs day trading vs swing trading).
What happens to spreads around the rollover
Liquidity thins around the rollover, as New York closes and before Asian trading picks up. Spreads commonly widen in that window, so an order placed right at the rollover can cost more than the same order an hour later.
Why is Wednesday a triple swap day?
Hold a trade through Wednesday night and the swap is often three times its usual size. For forex pairs, the triple swap is commonly applied at Wednesday’s rollover, and it covers Saturday and Sunday.
The reason is settlement. Spot currency trades settle two business days after the trade date, known as T+2. Rolling a position on Wednesday night moves its value (settlement) date from Friday to Monday, across the weekend, so that single rollover carries three days of interest. There is no rollover on Saturday or Sunday: those nights were already paid on Wednesday.
The usual forex convention. Bank holidays can add extra days, and other instruments can use a different day.
Other instruments can differ
The Wednesday convention belongs to spot forex. Index and commodity CFDs may apply the extra days on Friday instead, and crypto, which trades at weekends, may be charged every day. In MetaTrader 5, the symbol’s specification window lists swap long, swap short and the triple-swap day.
How is swap calculated?
Brokers publish swap per standard lot per night, with separate values for long and short positions. Whether it is quoted in pips, points or as a percentage, the arithmetic ends in the same place.
Illustrative rates, not HeroFX’s. Real swap varies by pair, direction and date; the current values are listed in the platform.
Platforms often quote swap in points: on a five-decimal pair a point is a tenth of a pip, so −7.0 points equals −0.70 pips.
Where the rate itself comes from
Behind the published figure is the rate differential applied to the size of the position. One lot of EUR/USD at 1.0850 is worth $108,500; with an example differential of 1.5% a year, one night is about $108,500 × 1.5% ÷ 365 ≈ $4.46 before the markup, which then trims the side that receives and adds to the side that pays.
Small numbers add up. Over four weeks the example long position pays $196 — almost 20 pips on a standard lot. On a trade held for weeks, swap is part of the risk calculation.
See overnight costs before real money is involved
A free demo account runs on live prices with virtual money. Hold a position through the rollover and see how swap shows up on it, with nothing at risk.
How does a swap-free account work?
A swap-free account is a trading account where positions held past the rollover do not receive interest-based swap charges or credits. It is often called an Islamic forex account, because it was created for traders who follow Islamic finance principles.
Those principles prohibit riba, usually translated as interest. Because standard swap is calculated from interest rates, many Muslim traders look for accounts where an overnight position carries none. Scholars hold differing views on aspects of currency trading; this article takes no position on them, and traders who want guidance usually consult an advisor they trust.
What usually replaces swap
Holding a position overnight still has a cost for the broker, so swap-free rarely means no overnight cost. Depending on the broker, one or more of these apply:
- A fixed administrative fee — a flat amount per lot or instrument for each night, not linked to interest rates.
- Wider spreads or a higher commission — the cost moves into the price of opening and closing the trade.
- A limited swap-free period — overnight costs waived for a set number of days, with a fee after.
The fair comparison is not “swap or no swap” but swap vs whatever replaces it, over the time a trade is usually held.
How the HeroFX Islamic account works
At HeroFX the swap-free option is the Islamic account. Positions held past the daily rollover do not accrue interest-based swap charges or credits. In their place, a fixed administrative fee set per instrument applies when a position is held past the rollover.
The fee is flat and disclosed up front: it is not calculated from interest-rate differentials and it does not compound. The exact fee for each instrument is shown in the portal before you open a position.
| Overnight cost | Standard swap | HeroFX Islamic account |
|---|---|---|
| What sets it | Rate differential plus broker markup | Fixed administrative fee per instrument |
| Can it be a credit? | Yes, when the differential favours you | No swap credits or charges |
| Moves with interest rates | Yes | No |
| When it applies | At the daily rollover | At the daily rollover, as a flat fee |
| Where you see it | Contract specifications | In the portal, before you trade |
| Spread and commission | Depend on the account | Same as the Raw Spread account |
Everything else matches the Raw Spread account: the same execution, instruments and pricing, with spreads from −0.4 pips and a separate commission per lot. It is available on both TradeLocker and MetaTrader 5, and one login can hold up to two Islamic live accounts.
Demo testing runs on the Raw Spread demo; only the swap-free treatment is unique to the live account. Other options are compared on account types, and the HeroFX review looks at the broker as a whole.
How traders manage overnight costs
Swap rarely decides whether a trade is good, but it quietly changes the result of trades held for days or weeks. Habits traders commonly build around it:
- Checking swap before holding — long and short values differ a lot between pairs.
- Counting nights, not days — a trade held from Monday to Friday crosses Wednesday, so it pays six nights, not four.
- Closing intraday trades before the rollover — avoiding both swap and the wider rollover spreads.
- Treating positive swap as a bonus, not a strategy — a carry trade earns the differential, but a small move in the exchange rate can wipe out weeks of credits.
- Comparing like with like — on a swap-free account, the overnight fee goes into the same calculation.
Swap is one of three costs on a held trade, with the spread and any commission. For pairs, pips and lots, see what is forex trading.
Trade swap-free on raw pricing
The HeroFX Islamic account keeps Raw Spread pricing and execution with no interest-based swap. The overnight fee for each instrument is shown in the portal before you trade.
Key takeaways
- Swap applies to positions open at the daily rollover, commonly 17:00 New York time.
- It is the rate differential plus the broker’s markup, so it can be a credit or a charge, and is often negative on both sides.
- Forex pairs commonly carry a triple swap on Wednesday to cover the weekend; other instruments can differ.
- Swap = lots × swap rate in pips × pip value × nights. It adds up on trades held for weeks.
- Swap-free accounts replace swap with another overnight cost; at HeroFX, a fixed fee per instrument shown before you trade.
Swap and swap-free account FAQs
What time is swap charged in forex?
At the daily rollover, which in forex is commonly 17:00 New York time: 21:00 UTC while New York is on daylight-saving time and 22:00 UTC the rest of the year. Only positions still open at that moment are affected, whenever they were opened.
Why is swap tripled on Wednesday?
Spot forex settles two business days after the trade. Rolling a position on Wednesday moves its settlement from Friday to Monday, across the weekend, so that rollover carries three days of interest. Nothing extra is charged for Saturday or Sunday. Other instruments may use a different day, sometimes Friday.
Can swap be positive?
Yes. If the currency you hold has a higher interest rate than the one you borrow, and the differential is larger than the broker’s markup, the position earns a small credit each night. When rates are close, the markup often leaves both directions negative.
Do day traders pay swap?
Not if every position is closed before the daily rollover. Swap only applies to positions open at that moment, so a trade opened at 09:00 and closed at 16:00 on the same day has no swap at all. Left open past the rollover, it pays or earns one night, or three on a Wednesday.
How can I avoid paying swap?
Traders avoid it in three ways: closing positions before the rollover, holding the side of a pair where swap is positive, or using a swap-free account. None is free of trade-offs. A positive swap comes with exchange-rate risk, and swap-free accounts usually replace swap with another overnight cost, such as a fixed administrative fee.
Is a swap-free account the same as an Islamic account?
In practice, yes: brokers use both names for an account in which positions held past the rollover carry no interest-based swap. “Islamic” refers to the traders it was designed for; “swap-free” describes how it works. Brokers usually apply a different overnight cost instead, and whether a product fits a person’s beliefs is a question for their own religious advisor.
Does a swap-free account have no overnight costs?
Usually it still has one, set in a different way. The HeroFX Islamic account replaces swap with a fixed administrative fee per instrument, applied when a position is held past the daily rollover. It is not based on interest rates, does not compound, and the exact fee is shown in the portal before you open the position.