Course: Forex Trading
Lesson Insights
The swap can have a significant impact on traders who employ high leverage and hold their positions overnight, such as those who follow the Carry Trade strategy. It is important to be aware of and consider the swap when trading forex, as it can impact the overall profit and loss of a trade.
In forex trading, the swap is the interest rate difference between the two currencies in a currency pair, and it is calculated and applied daily to a trader's account based on the size and direction of the trade. It is important to understand the swap rate and its potential impact, as well as to have a good understanding of the currency markets and the underlying economic and financial conditions that influence interest rate differentials.
The Carry Trade strategy is also introduced here, which is based on the interest rate differences of currency pairs.
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