April 14, 2016

Question:What's the condition of Swaps (dividend) of Forex, Stocks and Index markets?


Swaps are also referred as Interest rates which traders will need to pay or receive if they hold positions over night through the server time 00:00.

Swap is always charged at 00:00 server time unless you have a swap free account(Islamic account).

Swap Points of Forex Currency Pairs

Swaps points are variable and could change at anytime depending on the liquidity providers of LMFX.

The swap rate itself is generated by the difference of each country’s interest rate.

For example, USD/JPY will have swap points charged or credited to traders by the difference of the interest rates in US and Japan.

Some currencies like TRY(Turkish) and ZAR(South African) are subject to high swap points as these countries have got higher interest rates.

So currency pairs of TRY and ZAR may have higher swap points charged or credited for traders.

The swap charge of Forex Pairs are tripled on Wednesdays as the delivery date of tradings are T+2.

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Swap Points of Stock CFDs

All financial instruments are subject to swap charges including the Stock CFDs.

Although in the case of Stock CFDs, the swaps are generated from the dividend/bonus payment to share holders.

So you will be able to receive the dividend if you buy a share and hold onto it overnight, and you will charged for the dividend if you sell a stock.

The rates of the dividend payment may change by any corporate actions.

The stock CFDs offered in LMFX will offer you exact same price movement and dividend adjustment to traders as the underlying real stock markets.

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Swap Points of Index CFDs

Index CFDs are also subject to swap points.

You will be charged as usual at 00:00 server time, but the swaps will be tripled not on Wednesdays but Fridays.

Indices also charge or credit swaps according to the dividend payment.

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Arbitrage for Swap points is prohibited

Swap points are not only a bad thing for traders, it sometimes even credit some money into trading accounts.

There are many traders who are aiming to make profits by the difference of swap rates, but you are not allowed to trade arbitrage abusing bonus promotions and swaps.

Arbitrage trading is simply a trading method with out financial risks and many brokers prohibit the method.

Please contact LMFX support desk before if you are looking to trade arbitrage using its service.

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