Overnight Interest

What is Overnight Interest?

Overnight Interest also called Swap Rate or extension, refers to the profit or loss of the overnight interest rate according to position. Overnight interest is determined by the participation between two currencies in the overnight interest rate difference and the position whether is buying or selling.


Overnight Interest instruction

Only when holding the position to the next foreign exchange transaction date, you will have interest charge or interest payment;
Interest collection and payment occurs at the end of each working day, which is MT4 time 0:00 (Beijing time at 5/6 a.m.);
Some currency pairs have to pay interest on whether to buy or sell;
Swap rate is calculated by point, and MetaTrader4 will automatically converts them into the base currency of the account;
On Wednesday night, the swap rate will be charged for three times as usual;
During the period of locking, both sides will be charged overnight interest.

* As Overnight Interest changes frequently, please make sure to check announcement released on our platform!

Calculation Formula of Overnight Interest

Overnight Interest = annual interest rate differential / 360 days * 1 Lots Contract Unit * Minimum lots per sum * Exchange Rate Price (multiple/empty) * number of interest date
USD is the direct quotation of settlement currency.
For example, suppose that Client A takes short of 0.1 mini lots in the account and buys 5 lots of EUR/USD currency pair on Monday when the market price is at 1.06638/1.06659, and holds the position to Tuesday with the interest rate differential of PrmBuy0.56%, so the client’s overnight interest for buying the EUR/USD currency pair is calculated as follows:
0.56%/360*0.1*100,000*5*1.06659*1=0.83 USD

USD is the indirect quotation of basic currency
Such as USD/JPY currency pair, suppose that Client A takes short of 0.1 mini lots in the account and sells 5 lots of USD/JPY currency pair on Monday when the market price is at 113.651/113.680, and holds the position to Tuesday with the interest rate differential of PrmBuy-2.16%, so the client’s overnight interest for selling the USD/JPY currency pair is calculated as follows:
-2.16%/360*100,000*1*1 = 7.22 USD

Cross Trade
Such as EUR/GBP currency pair, suppose that Client A takes short of 0.1 mini lots in the account and buys 5 lots of EUR/GBP currency pair on Wednesday when the market price is at 0.85243/0.85275, and holds the position to Friday with the interest rate differential of PrmBuy-2.13%, so the client’s overnight interest for buying the EUR/GBP currency pair is calculated as follows:
-2.13%/360*0.01*100,000*5*0.85275*3 = 0.151 GBP

Number of interest date is calculated as follows:
Monday: swap rate of 1 day. Transaction on Monday, settlement on Wednesday, holding the position from Monday to Tuesday, and the settlement date is from Wednesday to Thursday, so the rate for 1 day should be paid;
Tuesday: swap rate of 1 day. Transaction on Tuesday, settlement on Thursday, holding the position from Tuesday to Wednesday, and the settlement date is from Thursday to Friday, so the rate for 1 day should be paid;
Wednesday: swap rate of 3 days. Transaction on Wednesday, settlement on Friday, holding the position from Wednesday to Thursday, and the settlement date is from Friday to next Monday, so the rate for 3 days should be paid;
Thursday: swap rate of 1 day. Transaction on Thursday, settlement on next Monday, holding the position from Thursday to Friday, and the settlement date is from next Monday to next Tuesday, so the rate for 1 day should be paid;
Friday: swap rate of 1 day. Transaction on Friday, settlement on next Tuesday, holding the position from Friday to next Tuesday, and the settlement date is from next Tuesday to next Wednesday, so the rate for 1 day should be paid;
*According to the international bank practices, the foreign exchange transaction will be settled after 2 trading days, and the swap rate is calculated as the settlement date.

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