Understanding Swap Fees in CFD Trading

What Are Swap Fees?

Swap fees, or simply swaps, are costs incurred on CFD positions held overnight. They represent the natural cost associated with leveraged positions and are essentially an interest charge deducted from the client’s account. Swap fees are applied when an open position is “rolled over” to the next trading day.

Characteristics of Swap Fees

• Swap fees vary between different assets and trading pairs.
• Charges apply at different times depending on the market being traded.
• The percentage fee depends on both the asset symbol and the position (buy or sell).

Calculating Swap Fees: An Example

To illustrate how swap fees are calculated, consider the following example:

Example Calculation

You opened a buy position of 1 standard lot on the US500 symbol at a price of $4,200.

• • Annualized swap fee for US500: 5%
  • Daily swap rate: 5% / 360 = 0.01389%
  • Calculation of the daily swap fee:
    • Position size: 1 standard lot
    • Current price: $4,200
    • Daily swap fee calculation: (1 * $4,200 * 0.05/360) = $0.5834 per day

If your account is in a different currency, the swap fee will be converted and debited accordingly. Note that swap fees are charged at different times based on asset types.

Swap Fee Schedule

Different markets have unique schedules for swap fees:

• • • Currency Pairs: Charged once at 23:59 (GMT+3) daily, and three times on Wednesdays.
    • Energies (e.g., Crude Oil): Similar to currency pairs with charges at 23:59 (GMT+3) daily and triple on Wednesdays.
    • Gold: No swap charges on the FXGT.com platform.
    • Major Indexes (e.g., US500): Charged after 3 days, with triple swaps on Fridays.
    • Individual Stocks: Charged once at 23:59 (GMT+3) and triple on Fridays.
    • Cryptocurrency (e.g., Bitcoin): Financing fees instead of swaps, charged every 4 hours at specific times (03:00, 07:00, 11:00, 15:00, 19:00, 23:00 server time).

Conclusion

Understanding swap fees is essential for effective CFD trading, especially for positions held overnight. By factoring in these costs, traders can make more informed decisions and better manage their trading strategies.