Swing and position trading
What the chart shows before you decide to hold
Open a daily chart of EUR/USD and you see one candle for each day. The candle marks the open, the high, the low and the close for that day. A swing trader uses these candles to find a move that lasts several days. A position trader looks for a move that lasts several weeks. Both hold through the night, so both pay the swap.
On the daily chart, a single candle can be tall. If the day's range is 80 pips, that is ₱868 on one standard lot at 1.0850. That number is not a target. It is a measure of how far price travelled in one session. The next session can travel the same distance in the opposite direction.
The chart also shows gaps. A gap is a jump between one day's close and the next day's open. On EUR/USD these gaps are usually small, but they happen. If you hold a position overnight, the market can open beyond the level where you planned to exit. Your stop loss order is filled at the next available price, which may be worse than the level you set.
How the swap is quoted and when it is charged
The swap is the daily interest adjustment for holding a position overnight. Your broker quotes it in points, in the quote currency, or as an annual percentage. The quote has two sides: one for a long position and one for a short position. One side may be a credit and the other a debit.
Most brokers charge the swap when the trading day rolls over, which is usually around 5pm New York time. In the Philippines that is early morning. If you open a trade on Monday and close it on Tuesday, you pay one night of swap. If you hold over the weekend, many brokers charge three nights on Wednesday to cover Saturday and Sunday. The exact day and the number of nights vary between brokers.
The swap rate is not fixed. It moves with interest rate expectations and with the broker's own markup. A rate you saw last month may be different today. Before you hold, check the swap rate in your trading platform. Multiply it by the number of nights you expect to stay in. That product is your cost of holding, separate from the spread.
Sizing a multi-day trade around the overnight cost
The spread is paid once, when you enter. The swap is paid every night. A trade held for ten nights pays ten swaps. If the swap is ₱2.50 per night on 0.10 lots, ten nights cost ₱25.00. That is more than the ₱7.50 swap on a three-night trade. The longer you hold, the more the swap matters.
Compare the swap with your target move. Suppose you aim for 50 pips on 0.10 lots. At 1.0850, 50 pips is ₱54.25. If the swap is ₱2.50 per night and you hold for ten nights, the swap takes ₱25.00 of that, leaving ₱29.25 before the spread. The chart has to move further just to cover the cost of time.
You can reduce the swap by using a smaller size or a shorter hold. You can also check whether the swap on the other side of the pair is a credit. A credit adds to your account each night, but it can change without notice. The SEC Philippines requires brokers to disclose fees, but the swap itself is set by the broker and varies. There is no single correct number.
Four days, one pip at ₱10.85
| Step | Amount | Note |
|---|---|---|
| Instrument and size | EUR/USD, 0.10 lots | One tenth of a standard lot, so each pip is 1 unit of the quote currency. |
| Entry price | 1.0850 | The rate shown on the schematic chart at the start. |
| Exit price after four days | 1.0880 | A move of 30 pips in your favour. |
| Gross profit | ₱32.55 | 30 pips x ₱1.085 per pip, using the 1.0850 rate. |
| Swap for four nights | ₱8.00 | A hypothetical cost of ₱2.00 per night; your broker sets this and it varies. |
| Net profit | ₱24.55 | ₱32.55 minus ₱8.00. |
Your broker may round the swap, charge it on a triple day, or quote it in points rather than pesos, so the exact figure varies.
Doing it once, step by step
You will take a daily EUR/USD chart, find the swap rate for the pair, and calculate what a multi-day hold costs before you enter. Do these in order, once, using the numbers from your own platform.
- 01
Open the daily chart
Set the chart to one candle per day. Find the last complete candle and note its high and low. If the range is 80 pips, that is ₱868 on one standard lot at 1.0850. This tells you how much the price moves in a day, not how much you will make.
- 02
Find the swap rate
In your platform, open the instrument details for EUR/USD. Look for the swap or rollover section. It shows a long rate and a short rate, often in points. Write down the rate for the side you plan to trade. If it is in points, convert it using the pip value for your lot size.
- 03
Multiply by the nights
Count the nights you expect to hold. If you enter on Monday and exit on Thursday, that is three nights. Multiply the swap per night by that number. For example, ₱2.50 per night for three nights is ₱7.50. This is your holding cost before the spread.
- 04
Compare with your target
Write down your target move in pips. Convert it to pesos using the pip value for your lot size. At 1.0850, one pip on 0.10 lots is ₱1.085. A 20-pip target is ₱21.70. Subtract the swap cost. If the result is small compared with the risk, consider a shorter hold or a smaller size.
- 05
Check the triple swap day
Ask your broker which day carries the triple swap. Many brokers charge three nights on Wednesday. If you hold over that day, add two extra nights to your calculation. The exact day varies between brokers, so check the contract specifications.
- 06
Set a stop for the overnight gap
Place a stop loss order at a level you can accept. Remember that a gap can open beyond that level. Your fill may be worse. Size the trade so that a gap of 30 pips does not risk more than you planned. The chart shows past gaps, but it cannot show the next one.
The mistake most people make here
Many beginners check only the spread before entering a multi-day trade and forget the swap entirely. They then wonder why a winning position pays out less than the chart suggests. Before you hold overnight, look up the swap rate for the pair and multiply it by the number of nights you expect to stay in. If the swap is large compared with your target move, a shorter hold or a smaller size may suit you better.Check yourself
You hold 0.10 lots of EUR/USD for three nights. The swap is ₱2.50 per night. What is the total swap cost?
₱2.50 x 3 = ₱7.50.
Your trade gains 20 pips on 0.10 lots at a rate of 1.0850, and the swap costs ₱7.50. What is the net profit?
20 pips x ₱1.085 = ₱21.70 gross. ₱21.70 minus ₱7.50 = ₱14.20 net.
Questions that come up next
Why does my profit shrink when I hold past the daily close?
The swap is charged each night you keep the position open. A trade that looks profitable on the chart still pays that daily adjustment. If the swap is a debit, it reduces the amount you keep. The longer you hold, the more nights you pay.
How do I find the swap rate in my platform?
Most platforms list it in the contract specifications for the pair, often under a heading such as swap or rollover. It is usually shown as two numbers, one for buying and one for selling. Some brokers quote it in points, others in the quote currency. If you cannot find it, ask your broker directly, because the figure varies between brokers.
Which nights cost more than one swap?
Many brokers charge three nights on one weekday to cover the weekend, when the market is closed. The usual day is Wednesday, but this varies between brokers. Some charge on Friday instead. Check your broker's schedule before you plan a hold that crosses a weekend.
Can the swap add to my profit instead of reducing it?
Yes. One side of the quote can be a credit. If you hold the side that earns the credit, the swap adds to your result each night. Whether your side earns or pays depends on the pair and the direction of your trade. It also changes over time as interest rate expectations move.
What happens to my stop loss when the market gaps overnight?
A gap is a jump between one day's close and the next day's open. If price opens beyond your stop level, your order is filled at the next available price. That price can be worse than the level you set. This is why an overnight hold carries risk that a trade closed the same day does not.
How does the size of my position change the swap cost?
The swap is charged per lot, so a larger position pays a larger swap. On 0.10 lots a swap of ₱2.50 per night costs ₱25.00 over ten nights. On 0.20 lots the same ten nights cost ₱50.00. Reducing your size reduces the overnight cost along with it.
The words used on this page
- swap
- The daily interest adjustment for holding a position overnight. Your broker charges it or credits it when the trading day rolls over. It is separate from the spread.
- pip
- The smallest standard move in a currency pair's price. On EUR/USD it is the fourth decimal place. One pip on one standard lot is 10 units of the quote currency.
- gap
- A jump between one day's close and the next day's open on a chart. Price skips the levels in between. An order placed inside a gap is filled at the next available price.
- stop loss
- An order that closes your position at a chosen level to limit a loss. It does not promise that exact level. In fast or gapping markets it fills at the next available price.
- standard lot
- A fixed position size used in currency trading. One standard lot is 100,000 units of the base currency. Smaller sizes such as 0.10 lots are one tenth of that.
- spread
- The difference between the buying price and the selling price of a pair. You pay it once, when you enter the trade. It is separate from the swap.
What to take away
- A trade held overnight pays the swap each night, so the cost moves from the spread to the daily adjustment.
- Multiply the swap rate by the number of nights you expect to stay in to see your cost of holding.
- Gaps can fill a stop loss at a worse price than the level you set, so an overnight hold carries risk a same-day trade does not.
- The swap rate, the day it is charged and the number of nights vary between brokers, so check your own platform before you hold.