Swap rates that change without a banner

[Fairman]

Swap rates that change without a banner

Swap rates aren't fixed. Brokers revise them when interest rates change, when funding conditions shift, or whenever they feel like it. The platform's specification updates quietly, and a position held overnight pays something different from last week.

Most scalpers don't care much about swap. Those who occasionally hold overnight, or run a strategy that sometimes straddles rollover, should.

A common surprise is a swap change on an exotic pair after a central bank decision. The long swap flips from positive to negative, or the short swap triples. A trade held for a few days racks up a cost bigger than the profit.

There's rarely an announcement. A few brokers send emails, others post a table on the website, and some do neither. The terminal's symbol spec is the most reliable place to look.

A simple habit helps: before any position is held past rollover, read the current swap figure for that direction. It takes five seconds and removes the guesswork.

Another useful trick is logging the swap table weekly. A time series of rates shows how often the broker changes them and in which direction.

Do swap rates on the pairs traded move much from week to week?

[Amanhasnoname]

This caught me on USDTRY a while ago. I had a small long that I meant to close the same day and ended up carrying for a long weekend, and the swap that had looked fine the month before had been cut hard. It cost more than the trade ever made, and nothing on the broker side mentioned the change.

Since then I keep a little spreadsheet where I paste the long and short swap for the eight pairs I touch, every Monday morning straight from the symbol specification window. On majors it barely moves most weeks, maybe a small adjustment after a rate decision. On the crosses with a high yielder in them it is a different story, and I have seen the short side change three times in a single month.

The other thing I check is the triple swap day. My broker charges it on Wednesday, but a friend's broker uses a different day for some metals, and that difference alone explained a cost he could not account for in his journal.