Tom-next and what it means for positions held across the day

[Amanhasnoname]

Spot forex settles two business days after the trade, and brokers roll positions forward each day to avoid delivery. The cost or credit for that is based on the interest rate difference and a broker charge, and the market quote for it is called tom-next.

For scalpers who close positions within minutes, none of this applies. But the roll process affects spreads around 5pm New York, and the swap figures posted by brokers tie to it.

Swaps can also change when interest rates change. A pair that was once cheap to hold long can become costly, and the posted rates may lag the market.

Wednesday's triple swap covers the weekend, since the settlement rolls over Saturday and Sunday. That is a quirk worth remembering for anyone holding through that day.

For short-term trading, the main takeaway is the cost and the spread behavior at rollover, not the interest itself.

Does the swap table get checked when central bank rates change?