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Forex Basics

Learn everything from basic forex concepts to unique advanced trading strategies and systems.

Introduction

Forex Basics

Forex Trading Features

Forex Basics

Forex Market Driving Forces

Forex Basics

Ways to Trade Forex

Forex Basics

Currency Trading Facilitators

Forex Basics

Currency Trading Quotes

Forex Basics

Leverage

Forex Basics

Swap Rates

Swap Rates

Another important component to remember when trading forex is the SWAP (Also known as rollover) rates. As mentioned before when trading a currency pair you are borrowing the bottom pair and purchasing and holding the top pair. So if you are trading the GBP/JPY you are actually purchasing the GBP and borrowing the Yen.

As you know, when holding a currency in an account you are receiving interest and when borrowing a currency you are paying interest. Because forex trading is highly leveraged and you are theoretically controlling large amounts of money, the SWAP rates accumulate and need to be accounted for in your trading. Typically forex dealers either pay or charge you the SWAP rate depending on the position you are holding.

Let's look at the GBP/JPY example. When taking a position in the GBP/JPY you are borrowing the Japanese Yen at a low interest rate and using it to purchase the Sterling which pays a higher interest; so when you are long this pair you will receive daily interest from your forex dealer and when you are short you will be paying daily interest. The forex dealer will always charge a little more than they pay when it comes to rollover rates in exchange for facilitating the process. Practice Forex Trading

Forex Basics   Forex Basics
Forex trading involves significant risk of loss and is not suitable for all investors. While you can earn a cash bonus,
you can also lose money due to the inherent risk of trading. Read full disclosure.

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