Overnight interest

What is overnight interest?

Overnight interest, also known as foreign exchange swap rate or rollover, refers to increasing or deducting the overnight interest rate of holding a position, which can earn or pay interest according to the trading direction. The overnight interest / deferral rate is determined by the overnight interest rate difference between the two currencies and whether the position is bought or sold.


Explanation of overnight interest

Interest will be charged or paid only when the position is held to the next foreign exchange trading day
The interest is collected and paid at 0:00 MT4 time (5 / 6 am Beijing time) at the end of each working day
Some currency pairs pay interest whether they are bought or sold
Swap rates are calculated in dots and metatrader4 automatically converts them into the base currency of the account
On Wednesday night, the swap was settled at three times the usual rate
When the order is locked, both sides will be charged overnight interest

*Due to the frequent change of overnight interest, please refer to the interest announced in the contract details of the trading platform!

Overnight interest calculation

Overnight interest = annual interest rate difference / 360 days *1 standard hand contract unit * hand number * exchange rate price (many / empty) * interest days
Direct quotation with us dollar as settlement currency
For example, EUR / USD: suppose that the customer has a 0.1-hand account, buys 5-hand EUR / USD on Monday, the market price is 1.06638/1.06659, the position stays overnight until Tuesday, and the interest difference is prmbuy 0.56%, then the overnight interest of the customer who buys euro is:
0.56%/360*0.1*100,000*5*1.06659*1=0.83 USD

Indirect quotation with us dollar as base currency
For example, USD / JPY: assuming that the customer is one bid hand account, short selling five USD / JPY hands on Monday, the market price is 113.651/113.680, and the position stays overnight until Tuesday, prmbuy-2.16%, then the overnight interest of the customer selling US dollars is:
-2.16%/360*100,000*1*1=7.22 USD

Crossroads
For example: EUR / GBP: assuming that the customer has a 0.01 hand account and buys 5 hands of EUR / GBP on Wednesday, the market price is 0.85243/0.85275, and prmbuy-2.13% from overnight to Friday, the overnight interest of the customer who buys euro is:
-2.13%/360*0.01*100,000*5*0.85275*3=0.151 GBP

Calculation of interest days:
Monday: one day overnight interest. Monday trading, Wednesday settlement, Monday position to Tuesday, settlement date is Wednesday to Thursday, so pay 1 day interest;
Tuesday: one day overnight interest. Trading on Tuesday, settlement on Thursday, position on Tuesday to Wednesday, settlement day from Thursday to Friday, so 1 day interest should be paid;
Wednesday: 3-day overnight interest. Trading on Wednesdays, clearing on Fridays, holding positions on Wednesdays to Thursdays, and clearing days are from Friday to next Monday, so three days' interest should be paid; therefore, every Thursday, the overnight interest added or subtracted will be three times of that on weekdays, because there are two days between Saturday and Sunday;
Thursday: one day overnight interest. Trading on Thursday, settlement on next Monday, position on Thursday to Friday, settlement day from next Monday to next Tuesday, so pay 1 day interest;
Friday: one day overnight interest. Trading on Friday, settlement on next Tuesday, position on Friday to next Tuesday, settlement day from next Tuesday to next Wednesday, so pay 1 day interest.
*According to international banking practice, foreign exchange transactions are settled after two trading days, and overnight interest is settled on the settlement day.