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Costs· Glossary

What Are Interest Rates? How They Set Your Swap Cost

Central bank interest rates set the rate differential between two currencies, which becomes the swap you pay or earn every night you hold a position open.

Interest rates are the price of money, set for each currency by its central bank. For a trader the consequence is narrower and more measurable than the macro commentary suggests: the difference between the two policy rates in a currency pair determines the swap you are charged or paid for holding that pair overnight. Everything else about rates is forecasting. This part is arithmetic that lands on your statement.

How it works

Every FX position is two currencies at once — long one, short the other. Holding it past the broker's rollover time (usually 17:00 New York) rolls settlement forward a day, and the interest differential is debited or credited.

Overnight swap ≈ Notional × (Rate of currency bought − Rate of currency sold) ÷ 365
                 − broker markup

Four properties do most of the work:

  • The sign flips with direction. Long the higher-rate currency against the lower-rate one earns the differential; short the same pair pays it.
  • Wednesday counts triple on most FX instruments, because that rollover carries the weekend's settlement. Some brokers apply the triple charge on Friday for other asset classes.
  • The markup applies to both sides. A positive rate differential does not reliably survive it. This is why so many accounts pay net financing whichever way they are positioned.
  • Rate changes are not gradual. A central bank decision moves the swap on every affected instrument from the next rollover, not over the following weeks.

Why it matters

Swap accrues on time, not on trades. It is not on the entry ticket, it does not show in a gross profit figure, and it does not pause while you are away from the desk. For a system holding positions a couple of hours it is close to irrelevant. For a swing or grid system holding for weeks it is often the whole difference between a strategy that works and one that does not.

The failure mode is specific: a strategy that is profitable gross and unprofitable net, where the gap belongs entirely to the broker. Alongside the spread and commissions, financing is one of the three costs that separate a backtest from a statement.

The mirror trap is the carry trade. Positive swap is a real income stream, but the differentials wide enough to be worth collecting usually belong to currencies with the widest devaluation risk. The income is small and daily; the correction is large and sudden. Leverage makes both halves bigger.

What the data shows

Across the public accounts on ShowMyTrades with trading history (August 2026), traders have paid $862,547 in swap against $4,782,670 in commissions. Financing is roughly a fifth the size of commission across that set, and it is charged for doing nothing at all. These are accounts published here, not a sample of traders everywhere.

The distribution is the harder number: 86.3% of accounts that carry any swap pay net negative swap. Roughly six accounts in seven treat financing as a cost, not an income. The minority collecting it sits on the receiving side of a differential, deliberately or otherwise.

Scale it against holding time. The median account on the platform holds a trade for 2.4 hours and closes 171 trades. On that profile swap is noise. On the profile that carries positions across weekends and month-ends, the same figure is the line item that decides the year.

Where you see it on ShowMyTrades

  • Total Swap Paid in the advanced statistics: cumulative financing in account currency, sitting next to Total Commissions. Both are absolute figures reported by the broker, not estimates we reconstruct.
  • The trades table has a per-trade Swap column, so you can see which positions carried financing and how much. The open-positions view totals it for everything currently held — the running cost of interest rates on your account right now.
  • Breakdown Statistics, on its By Symbol tab, splits profit per instrument — the fastest way to find the pair where financing is quietly eating the edge.
  • Avg. Trade Length in the advanced statistics tells you whether swap can matter for this account at all: hours, or weeks.
  • Custom Analysis has an Include swaps in profit calculations toggle. Turn it off, recompute the account's statistics, and read the gap directly. That gap is the financing cost of the strategy.

Common misunderstandings

  • "Swap only matters for long-term traders." It applies to anyone holding past rollover, and it is charged at triple weight on Wednesday whether the position is one day old or one hundred.
  • "A positive rate differential means positive swap." The broker's markup is deducted from both sides. Check the figure on the instrument, not the central bank table.
  • "Swap is too small to model." Small per night, unbounded in aggregate: $862,547 across our public accounts, none of it visible on an entry ticket.
  • "I should trade the rate decision." That is forecasting, with a poor base rate and a crowded field. Managing the financing cost you can already measure is a different activity, and the one with a known answer.

The full cost block, and what else a public account page is hiding in plain sight, is covered in how to read a trading account dashboard.