This guide delves into the different types of market indices, why it can be beneficial to trade them as CFDs, and covers some popular index trading strategies.

A swap in forex refers to the interest that you either earn or pay for a trade that you keep open overnight. There are two types of swaps: Swap long (used for keeping long positions open overnight) and Swap short (used for keeping short positions open overnight). They are expressed in pips per lot, and vary depending on the financial instrument you’re trading. In FXTM, you can see what swaps apply to which instrument on the Contract Specifications page. In the case of EURUSD, for instance, Swap short is 0.01 and Swap long is -0.48. Let’s use the EURUSD as an example to show how swaps work: if a trader shorts on EURUSD by 1 standard lot on a Thursday, and keeps the position open overnight, closing it on Friday, the Swap short is calculated as follows: 100 000 (the size of 1 Standard Lot) x (0.01 x 0.0001 pip) = $0.10. Meaning he earns $0.10 of interest. If the same trader goes long on EURUSD by 1 standard lot on Thursday, and only closes his position on the following Tuesday, the swap long formula would be: 100 000 x (-0.48 X 0.0001 pip) = -$4.8 per night. Meaning he pays $4.8 of interest per night. Since he’s keeping his position open for three nights, that would be a total interest of $14.4 (-4.8 X 3) that he would need to pay. Now let’s say the same position is only close the following Thursday. That would be a full week, which means 7 nights (5 week nights + 2 extra added for the weekend). This means he would pay $33.6 (7 X -4.8) of interest. It’s important to remember that, as a general rule, weekend swaps (2 nights) are always applied to any positions kept open over Wednesday. If a trader were to short EURUSD on a Monday with 1 Standard lot, and close his position on Thursday, the position would theoretically be open for only 3 nights, but at midnight on Wednesday, the weekend swaps would be applied. This would raise the total number of nights to 5. In this case, the trader earns $0.10 a night (100 000 X 0.000001) so he would earn a total of $0.50 ($0.10 X 5) for the total duration of his open position. What is the purpose of a Swap? Trading with leverage means borrowing money for forex positions. When a position is left open for more than a day, interest must be paid on that loan. Swaps are therefore essentially interest rates for leveraged funds. How can I potentially make money on Swaps in forex? The most popular way to profit from swap rates is the Carry Trade. You buy a currency with a high interest rate while selling a currency with a low interest rate, earning on the net interest of the difference. When are forex Swaps charged? The exact moment this happen will depend on your broker, but it’s usually between 11pm and midnight. How long can I keep a forex position open? As long as you like. Forex traders who keep positions open for days or weeks are called Swing Traders. Those who keep positions open for months or even years are called Position Traders. What if I want to trade forex without Swaps? If you close your positions before the end of the trading day – known as the rollover point — you’ll neither owe nor earn any swap charge. This is called Intraday Trading. What determines the interest rate behind a forex Swap? The interest rates for the individual currencies are based on decisions taken by their central banks. The amount credited or charged to the trader can also depend on: The difference between the interest rates of currencies The forex broker’s commission rates The day when you open the position Price movements of the currencies What is a negative currency Swap? This occurs when you hold a position for a currency that has higher interest rate compared to the bought currency. Why do forex Swap rates triple for positions held over a Wednesday? Trades take two days to settle, so those placed on Wednesday complete by Friday. And while the forex market is closed at weekends, banks still charge interest with triple fee rates covering the weekend, including orders held on: USDCAD, USDRUB, EURRUB, USDTRY, and EURTRY from Thursday to Friday Spot Commodities and Spot Indices held from Friday to Monday Where can I see Swap rates of forex currency pairs? You can find the current swap rates in the MetaTrader trading platform. They’re updated constantly to reflect the prices you’d be charged that night. To view swap rates in MetaTrader 4 and 5: Click ‘View’ > ‘Market Watch’ > ‘Symbols’ Select the currency pair Select ‘Properties’ on MT4, or ‘Specification’ on MT5 Back to Videos Articles Ebooks Glossary Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same. Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

Forex (or FX) stands for Foreign Exchange, which is the “place” where currencies are traded. In this market, exchanging one currency for another is called currency trading, which is always done in pairs. For example, if a trader wanted to exchange euro (EUR) for US dollar (USD), they would trade the EURUSD currency pair. Trading currencies implies that a trader simultaneously buys one currency while selling the other. Various economic, political, and environmental factors contribute to the changing values of currencies, and forex traders buy and sell currencies to take advantage of these swings in value. The forex market is a global, decentralised market. The forex market is by far the largest and most liquid financial market in the world, with an estimated average global daily turnover of more than US$6.5 trillion — which has risen from $5 trillion just a few years ago. In addition, it has no physical location or central exchange, and trades 24 hours a day, 5 days a week. How can I make money from forex trading? The idea is to predict how a currency pair's price will move, and open a position based on that prediction. You could profit from either a rise in price by going long, or a fall in price by going short. How much will it cost to trade forex? There’s usually no commission or fees to pay. Brokers are paid through the ‘spread’, which is the difference between the bid and ask prices. What about trading capital? You can start trading with us for as little as $100. You don’t need a huge deposit, as trading with leverage reduces the initial amount you need to open a position. Please note: leverage is dependent on your knowledge and experience, and can increase your losses as well as your profits. Which currency pairs are traded most in forex? The most popular currency pair is EUR/USD, followed by USD/JPY, GBP/USD, AUD/USD, USD/CHF, USD/CAD and NZD/USD. These pairs are known as the 'majors.' How is the exchange rate for a currency pair measured in forex? The standard unit of measurement for change in value between currencies is the pip. It stands for “point in price” or “percentage in point”. What are the main benefits of trading forex? In the forex market you can: Trade 24 hours a day, 5 days a week. Make your money go further with leverage Capitalise on high liquidity and volatility Trade at low cost Back to Videos Articles Ebooks Glossary Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same. Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

In forex, currencies are traded in pairs. The first currency is called the base currency and the second currency is called the quote currency. So for example, EURUSD, means that the base currency is the Euro and the quote currency is the USD. The quote currency is sometimes referred to as the counter currency. The best way to understand base and quote currencies is in terms of exchange rates. An exchange rate of 1.14020, for example, would mean that 1 unit of base currency would cost 1.14020 units of quote currency. So in this case, to own 1 EUR the equivalent of 1.14020 USD is needed. In other words, the first currency in a pair is quoted against the second currency. Back to Videos Articles Ebooks Glossary Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same. Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.