How is swap (overnight interest) calculated? | Why holding overnight costs

When you hold a position overnight, the broker charges or credits swap, which comes from the interest-rate differential between the two currencies.

Why swap exists

FX trading effectively borrows one currency to buy another; the rate differential decides whether you pay or receive.

How it is calculated

• Set by the broker per instrument (per point / per lot).
• Wednesdays are usually charged triple (to cover the weekend).
• Direction matters (long vs short).

Effect on long-term positions

For swing and long-term traders swap accumulates and must be part of your cost.

Relation to rebates

Rebates usually do not cover swap; they refund part of the spread/commission. Keep them separate.

Related: 5 ways to reduce trading costs. Not investment advice.