Traders need to know: What is Swap Long and how does it charge from the portfolio?

When you choose to hold positions outside of regular trading hours, you’ll encounter fees that are often overlooked. These are the Swap Long fees, which act as a cost that reduces the profit potential. For market players aiming to hold orders for months, awareness of this fee can be the difference between a worthwhile investment and a total loss.

What is Swap Long and where does the pricing come from?

Swap Long ( or Swap Buy ) is the fee charged when you open a Buy order and hold it overnight. In fact, it results from the difference in policy interest rates between two currencies.

When you choose to buy EUR/USD, it means you’re “buying” the EUR asset and simultaneously “borrowing” USD to pay out. The outcome: the ECB sets the interest rate for the euro, while the Fed sets the interest rate for the dollar. If the dollar yields 5.0% annually and the euro only 4.0%, you’ll need to pay out 1.0% per year. This is the basic concept.

However, brokers ( or their agents ) do not provide this for free. They include transaction costs, making the actual Swap Long value you see typically lower ( or higher ) than what theory suggests.

Types of Swaps traders encounter

Swap Long and Swap Short: what’s the difference?

• Swap Long: The fee for a Buy order, usually negative ( you pay ) because the interest rate you “borrow” is often higher than what you “hold”
• Swap Short: The fee for a Sell order, which is the opposite

These two values are never equal because brokers need to manage their own spread in each direction.

3-Day Swap: The common headache you often forget to consider

The Forex market closes on Saturday-Sunday, but interest in the financial system doesn’t stop. To avoid situations where brokers must charge swaps outside of trading days, they aggregate interest for 3 days ( Friday, Saturday, Sunday ) into a single overnight fee.

Most of the time, the settlement system ( T+2 ) is on Monday, before the Saturday-Sunday break. This means your 3-Day Swap will target Wednesday. If you hold an order from Wednesday into Thursday, the fee applies accordingly.

Example: If your Swap Long is -8.5 USD per night, because Wednesday is part of the 3-Day Swap, it becomes -25.5 USD instead.

How to find Swap Long before jumping into trading

On MT4 / MT5

1. Market Watch → right-click your currency pair
2. Select Specification
3. Look for “Swap Long” and “Swap Short”
4. These numbers are shown in Points, which need to be converted into real money

On Mitrade and modern platforms

• Select the asset → scroll to find “Overnight Fee”
• Usually shown as a percentage (%) per night, which is much easier to understand

Correct way to calculate Swap Long

Method 1: From Points units ( MT4/MT5 )

Swap ( in money ) = (Points) × (Value of 1 Point)

Example: Buy 1 Lot EUR/USD, Swap Long = -8.5 Points

• 1 Pip = $10 USD for EUR/USD 1 Lot
• Therefore, 1 Point = $1 USD
• Calculation: (-8.5) × ($1) = -8.5 USD per night
• Wednesday ( 3-Day ): (-8.5) × 3 = -25.5 USD

Method 2: From percentage ( %) (Mitrade and newer platforms )

Swap = (Total position value) × (Swap rate %)

Example: Buy 1 Lot EUR/USD at 1.0900, Swap Long = -0.008%

• Total value = 1 × 100,000 × 1.0900 = 109,000 USD
• Swap = 109,000 × (-0.008 / 100) = -8.72 USD per night
• Wednesday: (-8.72) × 3 = -26.16 USD

Key point: Swap is calculated from the full position value, not from the margin. If you leverage 1:100 and only put up 1,090 USD margin, the Swap fee of 8.72 USD per night is 0.8% of your margin—this is how Swap quietly eats into your profits.

Swap Long: opportunities and risks

Risks to watch out for

• Profit Evasion: You might gain 30 USD from price movement but lose 26 USD to Swap over three nights, leaving only 4 USD ( before spread ). This turns winning trades into cash losses.
• Market Stagnation Pressure: In sideways markets, negative Swap is a slow but steady loss every day.
• Margin Call Increase: Negative Swap on long positions combined with market movements can increase the risk of margin calls.

( Opportunities you can leverage

Carry Trade Strategy: Buy currency pairs with positive Swap Long ) like AUD/JPY ### to earn interest daily

• Generally, high-interest currencies ( AUD, MXN, TRY ) when bought against low-interest currencies ( JPY, CHF ) can generate positive Swap
• Risk: Exchange rates can move against you. Even earning Swap all year, you might still face losses from exchange rate fluctuations.

Islamic / Swap-Free Accounts: Special accounts with no Swap fees for Swap Long or Swap Short

• Suitable for position traders who want to hold for weeks or months
• Usually involve wider spreads or additional management fees

Strategies to reduce the impact of Swap Long

1. Choose transparent brokers: Mitrade shows Swap as a percentage per night, making it easy to calculate in advance.
2. Set short-term trading goals: If scalping, you rarely encounter Swap because you close orders within minutes.
3. Hold only the positive side: Focus on buying currency pairs with positive Swap Long, avoid risky selling.
4. Use Swap-Free accounts: If you want to hold long-term without hidden costs.

Summary

Swap Long may seem like a small number in the Specification window, but its impact on your portfolio can be significant. For long-term holders, it’s money that erodes profits each night. Knowing about Swap Long without actually planning around it is like walking through a forest without a map. Once you understand it, choosing trading strategies (Carry Trade, Swap-Free Accounts, or short-term Scalping ) becomes a calculated decision rather than a surprise that eats into your portfolio at month-end.