10 minute read
What is Swap in Exness? A Comprehensive Guide for Traders
from Exness
by Exness_Blog
In the fast-paced world of forex trading, understanding every aspect of your trading platform is crucial to maximizing profits and minimizing costs. One term that often confuses both novice and experienced traders is swap. If you’re trading with Exness, a leading online broker, you’ve likely come across this term in your trading terminal or account statements. But what exactly is a swap in Exness, how does it work, and how can it impact your trading strategy?
💥 Trade with Exness now: Open An Account or Visit Brokers 🏆
In this in-depth guide, we’ll break down everything you need to know about swaps in Exness, from their definition and calculation to practical tips for managing them effectively. Whether you’re a beginner looking to grasp the basics or an advanced trader aiming to optimize your strategy, this article has you covered. Let’s dive in!
What is a Swap in Forex Trading?
A swap in forex trading, often referred to as a rollover fee or overnight commission, is a fee or interest charged or credited to a trader’s account when a position is held open overnight. This fee arises due to the difference in interest rates between the two currencies in a currency pair. In forex, trades are typically settled after two business days (T+2), but when you keep a position open past the daily cutoff time, a swap is applied to account for the cost of maintaining that position.
For Exness traders, the swap is either deducted from or added to your trading account balance, depending on the direction of your trade (buy or sell) and the interest rate differential. This fee is a standard part of forex trading and applies to most brokers, including Exness.
Why Do Swaps Exist?
Swaps exist because forex trading involves borrowing one currency to buy another. When you hold a position overnight, you’re essentially borrowing funds from your broker to keep that trade open. The swap fee reflects the cost of this borrowing, based on the interbank market’s interest rates for the currencies involved.
For example, if you’re trading the EUR/USD pair and the Euro has a higher interest rate than the US Dollar, you might earn a positive swap for holding a long (buy) position or pay a swap for a short (sell) position. The exact calculation depends on several factors, which we’ll explore later.
How Does Swap Work in Exness?
Exness, a globally recognized broker, calculates swaps based on industry-standard practices but offers some unique features that make it stand out. Here’s a closer look at how swaps work on the Exness platform:
1. Swap Timing
Exness applies swaps at 21:00 GMT+0 in summer and 22:00 GMT+0 in winter. This is when the trading day officially rolls over, and positions held past this time incur a swap. The fee is calculated automatically and reflected in your account balance.
2. Triple Swap on Wednesdays
One key aspect to note is that Exness charges a triple swap on Wednesdays to account for the weekend, when markets are closed. Since most forex instruments take two days to settle, positions held over Wednesday night would settle on Monday, spanning three days (Friday, Saturday, and Sunday). To compensate for this, Exness applies a triple swap on Wednesday nights for certain instruments, such as forex pairs like USDCAD. However, for commodities like energies, a single overnight charge applies each day without a triple swap.
3. Swap-Free Accounts
Exness offers swap-free accounts, also known as Islamic accounts, which are particularly appealing to traders who cannot incur interest due to religious or strategic reasons. These accounts are available for all account types, including Standard, Standard Cent, Pro, Raw Spread, and Zero accounts. Notably, Exness provides swap-free trading for specific instruments like gold (XAUUSD), cryptocurrencies, stocks, and indices, even for non-Islamic accounts. This feature can significantly reduce trading costs for long-term traders.
4. Positive and Negative Swaps
Swaps can be either positive (credited to your account) or negative (deducted from your account), depending on the interest rate differential and whether you’re holding a long or short position. For example:
Long positions (buy): If the base currency has a higher interest rate than the quote currency, you may earn a positive swap.
Short positions (sell): If the quote currency has a higher interest rate, you may pay a negative swap.
You can check the swap rates (long and short) for each instrument in Exness’ Contract Specifications on their website or trading platform.
How to Calculate Swap in Exness
Understanding how swaps are calculated can help you make informed trading decisions. Exness provides a straightforward formula for calculating swaps, and you can also use their Trader’s Calculator for quick and accurate results. Here’s the formula:
Swap = Lots × Contract Size × Pip Size × Swap Rate (Long/Short) × Number of Days
Let’s break it down with an example:
Suppose you open a 1-lot buy position on EURUSDm with a Standard account on Tuesday at 15:00 and close it on Thursday at 23:00. Here’s how you’d calculate the swap:
Lots: 1 lot
Contract Size: 100,000 (standard for most forex pairs)
Pip Size: 0.0001 (for EURUSD)
Swap Rate: Let’s assume the swap long rate is -0.86852 (check Exness’ Contract Specifications for the exact rate).
Number of Days: The position is held from Tuesday to Thursday, covering three days (Tuesday to Wednesday, Wednesday to Thursday, and Thursday to Friday). Since Wednesday incurs a triple swap, the total is equivalent to 5 swap days.
Plugging these values into the formula:
Swap = 1 × 100,000 × 0.0001 × (-0.86852) × 5 = -44.42 USD
In this case, $44.42 would be deducted from your account as a swap fee. If the swap rate were positive, this amount would be credited instead.
💥 Trade with Exness now: Open An Account or Visit Brokers 🏆
Using the Exness Trader’s Calculator
Manually calculating swaps can be time-consuming, especially for multiple trades. Exness’ Trader’s Calculator simplifies the process by allowing you to input your trade details (instrument, lot size, account type, etc.) and get instant results. You can also use the currency converter to account for swaps when the quote currency differs from your account currency.
Factors Affecting Swap Rates in Exness
Several factors influence the swap rates charged or credited by Exness:
Interest Rate Differential: The primary driver of swaps is the difference in interest rates between the two currencies in a pair, set by central banks or interbank markets.
Broker’s Commission: Exness may apply a commission that varies based on market conditions and their risk management policies.
Instrument Type: Swaps vary by trading instrument. For example, swaps for cryptocurrencies, stocks, and indices are often zero, while forex pairs like EURUSD or USDCAD have specific rates.
Market Conditions: Swap rates can fluctuate due to changes in liquidity, volatility, or interbank rates.
Account Type: Different Exness account types (e.g., Standard, Pro, Raw Spread) may have slightly different swap conditions, though swap-free options are available across all accounts.
How to Check Swap Rates in Exness
Exness makes it easy to monitor swap rates directly from your trading platform. Here’s how to do it on MetaTrader 4 (MT4):
Log in to your Exness trading account on MT4.
Open the Trade tab in the terminal.
Look for the Swap column, located to the left of the Profit column, to see the swap amount for your open positions.
Alternatively, you can visit the Contract Specifications page on the Exness website for detailed swap rates for each instrument. This transparency ensures you’re never caught off guard by unexpected fees.
Swap-Free Trading with Exness: A Game-Changer
One of Exness’ standout features is its swap-free trading option, which has gained popularity among traders worldwide. Since late 2020, Exness has expanded its swap-free offerings to include instruments like gold (XAUUSD), cryptocurrencies, stocks, and indices. This is a significant advantage for traders who:
Hold positions for extended periods (e.g., swing or position traders).
Follow Islamic finance principles that prohibit interest (riba).
Want to reduce trading costs for specific instruments.
How Swap-Free Status Works
Exness automatically assigns accounts a Standard or Extended swap-free status based on trading activity, evaluated by their algorithm. You can check your swap-free status by logging into your Personal Area and navigating to the Settings menu.
Importantly, Exness does not impose additional fees or wider spreads for swap-free accounts, unlike some brokers. This makes their swap-free accounts highly competitive and cost-effective for long-term trading strategies.
Instruments with Zero Swap
Exness offers zero swaps on the following instrument groups:
Gold (XAUUSD): Ideal for traders focusing on precious metals.
Cryptocurrencies: Includes Bitcoin, Ethereum, and other major coins.
Stocks: Covers popular equities listed on major exchanges.
Indices: Includes indices like the S&P 500, NASDAQ, and more.
This feature allows traders to hold positions in these markets without worrying about overnight fees, making Exness a top choice for diversified portfolios.
Strategies to Manage Swaps in Exness
While swaps are an unavoidable part of forex trading for most instruments, you can take steps to minimize their impact on your profitability:
Opt for Swap-Free Accounts: If you trade gold, crypto, stocks, or indices, or if you qualify for an Islamic account, take advantage of Exness’ swap-free options to eliminate swap costs entirely.
Close Positions Before Rollover: If you’re a day trader, aim to close your positions before the daily swap time (21:00 or 22:00 GMT+0) to avoid fees.
Monitor Wednesday Swaps: Be cautious about holding positions over Wednesday night, as the triple swap can significantly increase costs for certain instruments.
Use the Trader’s Calculator: Plan your trades by calculating potential swap fees in advance to ensure they align with your risk management strategy.
Choose Low-Swap Instruments: Focus on instruments with lower or positive swap rates to reduce costs or even earn a profit from swaps.
Leverage Exness’ Transparency: Regularly check the Contract Specifications to stay updated on swap rates, as they can change based on market conditions.
Common Misconceptions About Swaps
1. Swaps Are Always Negative
While swaps are often associated with costs, they can also be positive, meaning you earn money for holding a position overnight. This depends on the interest rate differential and your trade direction.
2. Swap-Free Accounts Are Only for Islamic Traders
Exness’ swap-free accounts are available to all traders, regardless of religious beliefs, for specific instruments like gold and cryptocurrencies. This makes them accessible to anyone looking to reduce trading costs.
3. Swaps Are the Same Across Brokers
Swap rates vary between brokers due to differences in commission structures, liquidity providers, and risk management policies. Exness’ competitive swap rates and swap-free options make it a standout choice.
Why Choose Exness for Managing Swaps?
Exness has built a reputation as a trader-friendly broker, and its approach to swaps is no exception. Here are some reasons why Exness is a great choice for managing swap-related costs:
Transparency: Exness provides clear information on swap rates through its Contract Specifications and Trader’s Calculator.
Swap-Free Options: The availability of swap-free trading for gold, crypto, stocks, and indices is a major advantage for long-term traders.
Competitive Rates: Exness’ swap rates are aligned with market standards, and their commission structure is fair and transparent.
User-Friendly Tools: The Trader’s Calculator and MetaTrader integration make it easy to monitor and calculate swaps.
Flexible Account Types: Whether you’re using a Standard, Pro, or Zero account, Exness offers swap-free options to suit your needs.
Conclusion: Mastering Swaps for Better Trading
Understanding swaps in Exness is essential for any trader looking to optimize their strategy and manage costs effectively. By grasping how swaps are calculated, leveraging Exness’ swap-free accounts, and using tools like the Trader’s Calculator, you can make informed decisions that align with your trading goals. Whether you’re avoiding swaps altogether or strategically choosing instruments with favorable rates, Exness provides the flexibility and transparency needed to succeed in the forex market.
💥 Note: To enjoy the benefits of the partner code, such as trading fee rebates, you need to register with Exness through this link: Open An Account or Visit Brokers 🏆
Read more:
