Exness’s platform has no Swap Cost
While most brokers charge swaps or overnight fees, Exness decided to eliminate them for the most popular instruments. Stocks, crypto, indices, gold are all swap-free, along with some popular currencies.
Focus on trading, not on paying.
Exness has created a trading environment that ensures the lowest possible costs for the clients.
- Forget about withdrawal fees
- Exness pays your third-party transaction fees so you don’t have to.
- Account for every type of trader
- Choose the one that will maximize your returns while minimizing your costs.
- Say goodbye to swaps
- Exness has eliminated swap fees for most of the instruments, including majors, stocks, crypto, indices, and gold.
What is Swap Point?
Swap (Forex Rollover) is the fee or interest charged for holding a trading position overnight to the next Forex trading day.
Swap interest is generated when a position is held overnight, the result is an increase or decrease in the amount of the client’s account, the amount of which depends on the interest rate differential of the currency traded, the direction of the trade and the volume of the trade.
Swap transactions occur at the “highest-end” of the money market, which is the interbank market, after which these trades down to all of its lower hierarchies.
If a position is kept open and carried over to the next day according to the settlement of both parties, it means that the value date is transferred to the previous day. The corresponding amount of currency involved in the transaction is lent in the interbank market and borrowed at demand and credit rates.
Borrowing proceeds and borrowing costs are passed on to customers:
- The position can be automatically re-opened and adjusted for the swap, price and new value date;
- Alternatively, the position retains the previous price, but overnight interest has been credited to or deducted from the client’s account.
The cost of the swap, or more precisely, the amount and sign of the swap, depends on the difference in interest rates between the two currencies being traded. Usually, the deposit and credit rates are different for the same currency (the credit rate is usually higher). This is why the cost of a long and short position on the same currency pair is different.
When Swap is Good for Traders?
From the client’s point of view, the higher the interest rate of the currency bought and the lower the interest rate of the currency sold, the higher the profit of the position transfer. If the interest rate of the currency bought is higher than the interest rate of the currency sold, then the client will receive interest. Instead, interest will be deducted from the client’s account.
Obviously, the swap terms offered by different companies can vary dramatically: the cost of swaps on positions on the same trading instrument can sometimes be quite different. The question is, how far is the company from the current interbank market rate in the calculation of swaps.
Because the transfer position is made one day in advance, which is a one-day interest rate that reflects the current real money market, the transfer position can ensure that the customer maintains the position for a long time. But if the company is far away from the upper level of the market, then the transfer position will make the customer pay more Fees because there are additional fees for other transfers, so the interest rate of the overnight interest is different from the interbank interest rate.
Many companies provide trading services in the foreign exchange market, and there are few fixed ratios of swap values and benefits, which make customers pay more fees, which is very unfavorable to customers. Therefore, such additional “fees” in different companies There is a big difference.
When studying the conditions of swap trading, it is worth noting the overnight interest difference between buying and selling. The larger the difference, the greater the benefit for many companies. Because banks also deposit and loan interest rate spreads are very low, especially in liquid currencies.
When Does Swap Interest Matter?
Swap interest is executed once a day, so for traders who hold positions for a long time, overnight interest is an important trading condition. These customers pay attention not to intraday fluctuations, but to the direction of continuous movement. For customers, open Strategic positions, trading trends in the market.
In addition, favorable conditions for overnight interest rates for the client, first of all, is possible to use the trading strategy «Carry Trade» (carry trade). This strategy is based on the interest rate difference between the two currencies, the borrowed currency pair has a lower interest rate, and the deposit- has higher interest rates.
With regard to “interbank” overnight interest, there is another example that is important for the client – hedging of a locked position. For example, if the client opens a position in anticipation of market movements, but the price does not temporarily change as expected, he can open a position in the opposite direction to protect the position from losing money (without closing the position). At this time, the minimum interbank interest rate spread makes it possible to maintain such a position with minimal cost.