A while ago we received the below email from one of our new traders:

Hi Sure Trading Team

I hope you are well.

Please see below image. I took two long trades yesterday (the highlighted ones). And I noticed overnight the swaps have been charged (highlighted in yellow). However, they seem to be really high for 1 day. I looked at the symbol info and the swap rate is about 6%. If I use the position size on the first trade (113,000) and I work out 1 days’ worth of interest at 6% I get about R18 but they have charged R54. Likewise on the larger trade I get about R50 but they have charged R154. It’s almost as if they have charged me for 3 days’ worth of interest, but I have only had the trade for 1 day? Or am I missing something?

Thanks

Here is our response, which I am sure you will find helpful:

So, this is something that also came as a shock to me when I started experimenting in the forex market.

3 times the daily swap is always taken on Wednesdays when you are trading the forex market. The reasoning for this is because the markets are closed on the weekends, so they take the swaps that would have been charged on Saturday and Sunday from your account on Wednesday.

It is based on Wednesday at 5PM in New York. Even if you are in a trade for only a few minutes that happens to fall over that time you will be charged the triple swaps. This is unfortunately a universal thing and all forex brokers work this way, not just Velocity.

I found this following article excerpt online which, I think, explains it quite well:

Although the Forex market operates continually 24 hours per day, positions are still accounted for on a daily basis and the end-of-day time in Forex is 5:00 PM New York time. This means that if you have any positions open at 5PM NY time, they need to be ‘rolled over’ to the next trading day.

The settlement date of most Forex instruments is 2 days from the date that the position was closed. If you close your position before 5 PM NY time on any given day, the settlement date will be 2 days out and this will be the date that the banks will physically deliver the currencies involved in the trade.

In the case of Wednesday, if you close your positions before 5PM the settlement date will be 2 days in the future, which is Friday. However, if you hold your positions open past 5PM, the position is ‘rolled over’ to Thursday which will settle on the following Monday. This is due to the fact that banks do not operate on Saturday or Sunday.

The result is that the daily rollover charge is applied to account for not only Wednesday, but Saturday and Sunday as well.

I hope that answers your questions.

Regards

Sure Trading Team