Swap

Every forex pair has two interest rates baked in — the rate of the base currency and the rate of the quote currency. When you hold a position past 5pm New York time (the daily rollover), the broker either credits or debits your account with the difference between the two rates, prorated to your position size. That credit or debit is the swap. If you're long a high-yielder against a low-yielder (long USD/JPY when Fed rates are 5% and BoJ rates are 0.1%), you EARN swap. If you're short the same pair, you PAY swap. Swap rates also include the broker's markup, which varies wildly between brokers. Swap is small for a single overnight hold (often $1-5 per mini lot) but it compounds for swing traders holding for weeks. A long USD/JPY position held for a year in 2023 might have earned 8-10% in swap alone, on top of any price appreciation.