And here a newbie has several questions at once.. How can I buy currencies of other countries, having a working deposit in Russian rubles? And who, actually, purchased and to whom the selected currency is sold? The answer to everything. These questions is an exchange tool called SWAP (swap).
General interpretation of the concept
This currency difference between the rates of the Central Bank can be both positive, as well as negative, and sometimes zero. If we are talking about working on one currency pair for up to 3 months, then, usually, losses or gains on a swap are not felt due to currency fluctuations, which more than compensate for the difference in interest rates. Swap is charged in 00:00 hours GMT, either in 2:00 by Moscow time. Therefore, this indicator is not of interest to traders., opening and closing deals within the working day.
In view of the above, we can conclude, that a swap in Forex is a variable, equal to the difference in interest rates of banks, selling and exchanging currency pairs. The main function of this exchange-traded instrument is the ability to sell the currency of another country in the presence of a loan in another foreign bank. A side opportunity in case of successful circumstances - passive earnings on the difference in interest.
If the interest rate lending at a US bank is 0,5%, and the deposits in the EU Bank are 1%, then the swap will be positive (+0,5%). This will allow us to receive a small income with an open EUR / USD currency pair until then, while we work with this tandem.
"Traders Union" is the first official International union of Forex traders
Firstly, trader gotta understand, that it is impossible to lose your money on swaps due to the large amount of leverage, provided by a brokerage company, as well as due to significant fluctuations in exchange rates. Don't have to worry about, that the swap will "eat up" all the profits when entering the market, because often its size is too small to, to influence the course of trading and the size of the profit.
Forex SWAP
Forex swap is the difference between the interest rate of the central bank, whose currency the trader is buying, and the rate of another central bank, whose currency the trader wants to sell. Swap is not only negative and positive, but it may be completely absent, if the rates of central banks coincide.
By maturity, currency swaps are divided into 3 subspecies:
Secondly, the trader must realize, that it is impossible to make money on swaps due to its small size. If you want to get income from trading on the Forex market, should only rely on the forecast, where swap is not involved. Scalpers, usually using intraday trading strategies, even if there is a positive swap, they should not carry over positions to another day, because, according to the rules of such strategies, trades are not carried over and must be closed within a day.
Interest rate swaps
The peculiarity of the swap is, that the exchange of assets, which are represented by securities, currency or other instruments, occurs only for a certain period, some time later, traders return to each other, than previously exchanged. From a beginner's point of view, non-exchange trading, the action looks completely pointless. However, both traders pursue a very specific goal in the exchange process - to get mutual benefit.. Swap helps increase the amount of assets and hedges, that is, it insures risks. An important aspect for exchange players is also the right to gain access to markets of other jurisdictions through a swap., where thanks, allowable, lower taxes have an opportunity to get additional profit.
Currency swaps
Such operations make it possible to inject capital into the stock exchanges of developing countries.. When exchanging payments, the value of the exchange index and the interest rate are taken into account.
Exchange of interest rates on a loan: floating to fixed and vice versa, depending on the financial situation and expectations of certain changes in the market. In this case, the two parties agree on interest rate swaps in order to reduce risks and reduce the interest paid on the loan..
It will not work to earn a serious amount in this way in a short time., but, if you hold an open deal with a positive swap for a long time, you can get some benefit.
