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Forex SWAP Calculator

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SWAP in forex is the net profit or loss that trader gets for holding currency positions open overnight. Traders pay interest SWAP rate when broker funds are used for entering the trade.

For example, if a trader is trading EUR/USD currency pair, USD is being borrowed from a broker in order to purchase EUR. It means that traders will have to pay interest for borrowed USD and will earn profit for purchasing EUR.

So basically SWAP rate is based on the difference of interest rates on the currencies formatting currency pair. If the forex SWAP rate is positive, it means that the trader will get additional profits – if a negative trader will face additional losses.

Normally interest payments differ for credit and deposit. Interest on credit is higher than on deposit – that is why currency SWAP is so important for the forex trader. Also, exchange rates may differ in short and long for the same currency pairs.

 

SWAP Rate Formula

 

The forex SWAP rate can be calculated using the following formula:

Swap rate = (Contract x [Interest rate differential + Broker’s mark-up] /100) x (Price/Number of days per year)

Where:

  • Contract – contract size in units;
  • Interest rate differential – difference between interest rates on currencies. (For example if trading EUR/USD pair, FED rate is 2.5% and EU central bank rate is 3.25%, so 3.25-2.5=0.75%)
  • Broker’s mark-up – the interest earned by broker for lending money to trader;
  • Price – the actual exchange rate;
  • Number of years per day – normally 365, but some brokers use 360 for calculations;

 

Calculation Example

Currency pair: EUR/USD, Contract: 100 000 units, Interest rate differential: 3,25-2,5=0,75, Broker’s mark-up: 2,5%, Price: 1,25, Number of days per year: 365.

Swap rate = (100 000 * [0,75+0,25]/100) * (1,25/365)

Swap rate = (100 000 * 0,01) * 0,003424

Swap rate = 1 000 * 0,003424

Swap rate = 3,24

 

Using The Calculator

  1. Select the contract size;
  2. Enter the interest rates for 1st and 2nd currencies;
  3. Enter the brokers mark-up;
  4. Enter the price or exchange rate;
  5. Select the number of days per year;
  6. Hit calculate.
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