Swaps, also known as rollover fees, are the interest charges or credits applied to a forex trading position that is held open overnight. In foreign exchange trading, currencies are traded in pairs, meaning one currency is bought while another is sold. Each of these currencies has an associated interest rate set by its central bank. The swap reflects the interest rate differential between the two currencies in the pair.

When a trader holds a position past the daily market rollover time, usually around 5:00 PM New York time, the broker either pays or charges a swap. If a trader buys a currency with a higher interest rate and sells one with a lower interest rate, they may receive a positive swap. Conversely, buying a low-interest currency against a higher-interest one usually results in a negative swap, meaning the trader pays a fee.

Swap rates vary between brokers and can change due to market conditions, interest rate adjustments, and liquidity factors. On Wednesdays, swaps are typically tripled to account for weekend settlement when banks are closed. This can significantly impact traders who keep positions open for several days.

For short-term traders such as scalpers or day traders, swaps often have minimal impact because trades are closed within the same day. However, for swing and position traders, rollover fees can materially affect profitability. Understanding swaps helps traders plan holding periods, manage costs, and avoid unexpected charges on their trading accounts.