What are overnight fees?

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  • #196566 Reply
    Andrés

      Hey everyone, quick question because I’m still figuring all this out! I noticed my broker these overnight fees (I think they’re called swap or rollover fees?) and I’m trying to wrap my head around why they exist. Like, what exactly am I being charged for? And how do they even calculate those fees? Sometimes they seem small, but other times they’re bigger than I expected. Would love if someone could break it down in simple terms for me. thanks!

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      • #196596 Reply
        Christian Harris
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          Overnight or swap fees are charges you pay when you keep a position open past the end of the trading day.

          These fees are based on the interest rate difference between the two currencies in a forex pair or the cost of holding a leveraged position in other markets.

          If the interest rate on the asset you’re buying is higher than the one you’re selling, you might earn a small amount instead of paying a fee.

          You usually pay a small percentage to hold your trades overnight. These fees can add up over time, so factoring them into your trading strategy is essential – especially if you’re a swing trader.

          However, swap fees are not charged on all instruments.

          They are most commonly applied in forex trading, reflecting the interest rate difference between two currencies in a currency pair. Swap fees can also apply to commodities, indices, and stocks if you are using leverage.

          Specific trading instruments, like spot cryptocurrencies or real stocks/ETFs, typically do not have swap fees because no borrowing is involved.

          Always check with your broker to see which instruments have overnight charges.

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