How to calculate swap charges on Deriv (Synthetic)

For synthetic, the swap charge is calculated on an annual basis for long and short positions based on this formula:

Swap charge = volume × contract size × asset price × (swap rate ÷ 100) ÷ 360

This gives you the swap charge in USD.

Let’s say you want to keep 0.01 lots of Volatility 75 Index with an asset price of 400,000 USD and swap rate of -7.5 open for one night.

The contract size is one standard lot of Volatility 75 Index = 1

If the swap rate is positive, your account will be credited with the swap amount. If it is negative, your account will be debited.

So you will require a swap charge of 0.83 USD to keep the position open for one night.

Deriv’s swap calculator helps you to estimate the swap charges required to keep your positions open overnight on Deriv MT5 (DMT5).

How to calculate swap charges on Deriv (Financials)

For financial, the swap charge is calculated based on this formula:

Swap charge = volume × contract size × point value × swap rate

This gives you the swap charge in the quote currency for forex pairs, or in the denomination of the underlying asset for commodities.

For instance, if you are trading the USD/JPY forex pair, the swap charge will be computed in Japanese Yen (JPY) which is the quote currency. On the other hand, if you are trading oil, then the swap charge will be computed in US Dollar (USD), which is the denomination of the underlying asset – oil.

Let’s say you want to keep two lots of EUR/USD with a point value of 0.00001 and swap rate of -0.12 open for one night.

One standard lot for Forex = 100,000 units

The point value is derived from the current digits of the asset. In this example, the digit is 5, so the point value is 0.00001.

If the swap rate is positive, your account will be credited with the swap amount. If it is negative, your account will be debited.

So you will require a swap charge of 0.24 USD to keep the position open for one night.

Transactions in the foreign exchange market are all conducted on-site. That is, all transactions are completed through the actual delivery of currency on the second working day after the transaction is executed. However, for speculative transactions (in fact, what you are going to do is speculative transactions), there is no need to involve real money delivery. If you execute the order within one business day, the delivery will be canceled. This will not cause any problems. But what if you leave your order open for more than one day?

For deferred payments from Wednesday to Thursday, swap transactions will be deducted/added at a triple size (for Wednesday, Friday and Saturday).

What is a swap transaction?

A position deferred payment operation called a swap transaction can help traders achieve this goal. The basis of this operation is that you must “close” the order and reopen it at the closing price. At the same time, funds equal to the size of the swap transaction will be deducted from or added to your account. The size of swaps depends on central bank interest rates and a series of other factors. Because interest rates are set by the central bank of each country, this will cause huge differences in currency interest rates across countries. The calculation of swap rates will take such differences into account.

Who will calculate the swap transaction and how?

Swap transactions will be automatically calculated at the end of each trading day. For deferred payments from Wednesday to Thursday, swap transactions will be deducted/added at a triple size (for Wednesday, Friday and Saturday). In the MetaTrader 4 trading platform, you can view the current swap rate of each currency pair (for this, you can right-click and select the “symbol” in the “Market Watch”. In the displayed window, select the currency pair you need and Click the “Properties” button. The swap rates for long and short positions will be displayed in points).

The scale of swap transactions can be checked in the trading terminal. The deduction/addition of the swap transaction in the demo account is the same as the real account.

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Deriv is an online Forex and CFD broker with 1:1000 leverage on MT5 platforms. Deriv has been in the financial industry since 1999.

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